DLF signs Aman Resorts deal

DLF, country’s largest realty firm has signed the deal to sell its international hotel chain, Aman Resorts. In line with its strategy to exit non-core assets and reduce debt, DLF, has announced the sale of Aman Resorts to Adrian Zecha, the luxury hotel chain’s founder and chairman, for $300 million (about Rs 1,600 crore). Both the parties have signed a definitive agreement for a management buyout, and the deal is expected to close by February 2013, However, the deal, does not include Aman New Delhi, a trophy property at Lodhi Road, which is frequented by the who’s who of Delhi.

DLF Golf & Country Club wins again

DLF Golf & Country Club wins “Best Golf Course Award” in India at the recently concluded Asian Golf Monthly Awards - 2012 held at the picturesque Empire Hotel & Country Club, Brunei. This was the Club’s 5th win in 6 years. The award was given away by Pehin Dato Yahya, Brunei’s Minister of Industry and Primary Resources to Mr. Aakash Ohri, Director, Business Development, DLF Home Developers Ltd., others honored at the event was professional golfer Jeev Milkha Singh.

DLF redefines luxury in Delhi

DLF, a prime name in luxury living has launched two of its iconic properties, King Court in W block and Queens Court in E block in the beautiful vicinity of Greater Kailash Part II. It will be offering a total of 38 luxury housing units. With DLF's luxury homes in Delhi, the niche class of Delhi can heave a sigh of relief as they will not have to move to NCR areas for the same. DLF’s King’s and Queen’s court will offer 27 flats, with sizes ranging between 5,000 sq ft and 7,200 sq ft, and 11 villas each of 7,000 sq ft. The complex offers a perfect living location with elite high class colonies surroundings.

DLF Golf Country Club

DLF Golf and Country Club was launched in 1999 and is situated in the midst of DLF City in Gurgaon, spanning over 142 acre. DLF Golf and Country Club provides DLF residents with the world class golf infrastructure. The Clubhouse is designed by architect, Hafeez Contractor in a true colonial style, it also provides state of the art 18 holes golfing facilities for avid golfers. Apart from golf course, the club also provides DLF residents with Sports Complex and the Club House. Today, the club has become a must go spot for creme de la creme of Delhi-NCR and for MNCs and other business houses in the city.

DLF divesting in wind business

DLF, realty giant will be divesting its wind business, as part of a strategy to strengthen its real estate business. Most of the DLF shareholders are in favour of selling its wind power business in order to increase its focus on realty sector. DLF owns wind farms in Gujarat, Rajasthan, Tamil Nadu and Karnataka and has an installed capacity of 228.7 megawatts (MW). The company has hired Ernst and Young (E&Y) an audit and consulting firm in order to hive off the wind unit. The company is targeting to mop up Rs 1,000 crore through sale of its wind power unit.

Too early to tell if CCI changes in DLF buyer-builder pact will become model

Modifying the buyer-builder agreement of DLF-Belaire last week, the Competition Commission of India (CCI) said it could become a model pact for the industry, since DLF is the market leader. However, according to experts, the competition watchdog might be too ambitious here, as the dominance of DLF is yet to be proved at the Competition Appellate Tribunal(Compat). Incidentally, some real estate associations are already in discussion with CCI over a model agreement for the industry. According to CCI Chairman Ashok Chawla, the modified agreement in the DLF case could work as a model framework for commercial agreements between real estate developers and property buyers, and could serve as a benchmark for the sector. “It is a very large wish of CCI. Whether DLF was dominant or not is yet to be decided,” said M M Sharma, partner, competition practice, Vyas Associates. The moot point, according to Sharma, a competition lawyer, is whether DLF is dominant in the “relevant market”. Compat’s next hearing of the DLF case is slated for Wednesday. “Whether a real estate company is dominant or not — DLF was found to be dominant because it was big — most of them follow the same format pattern that flows from big players in the market,” Chawla had told media last week. According to Vinod Dhall, former CCI chairman, the CCI’s modification in the buyer-builder agreement is part of the appeal process to Compat for a particular case. “It is a case of abuse of dominance, and a part of it is the one-sided clauses. However, it will be hard to understand who started these one-sided clauses.” However, based on the outcome of the case, if DLF makes these changes in its agreement, many developers may feel compelled to fall in line, said Dhall. The former CCI chairman added that although it was more of a consumer matter, CCI looked into one-sided agreements due to a regulatory vacuum and consumer courts being unable to have made an impact. On the other hand, the Confederation of Real Estate Developers of India (Credai) told Business Standard that it had a meeting with CCI recently to discuss standard clauses for the sector. “We have asked CCI to give us standard clauses, a list of do’s and don’ts for the entire industry,” said Lalit Kumar Jain, chairman, Credai. “We will welcome a well-dialogued document, a result of detailed discussions on what’s right and judicious,” he added. Jain said Credai will study the modified clauses by the CCI in DLF’s case and come out with its own clauses, discuss with the CCI and circulate it among builders. In case of delay in delivery, the CCI said DLF should pay an amount to its buyers as penalty, similar to the penalty the builder charges from buyers for delayed payments, the CCI said. To this, Jain said that penalty is a “hugely disputable clause”. According to R R Singh, director-general of the National Real Estate Development Council (Naredco), the draft submitted by CCI is for a particular case and is up to the Compat to accept or reject it. However, he added that after some modifications and corrections, the draft could become a model agreement. “Whoever makes the model agreement for the industry, be it the regulatory authority or the state government, the draft will work as a base for model agreement,” he said. In March 2012, Compat had asked the CCI to pass an order specifying the extent and manner in which terms and conditions of the apartment buyers’ agreement need to be modified.

DLF Clarifies IAC allegations

Last evening, in their press conference, IndiaAgainst 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’slength basis. Our business relationship has been conducted to the highest standards of ethics andtransparency, 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 ofRs 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 ofDLF. 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. Theprice 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, DLFagreed to advance Rs 15 crores in instalments simultaneous to the commencement ofdue 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 ofRs 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 inMagnolias 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 allocated7 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 samewas 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 andthe 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 of350 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 criteriathrough 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 ofHaryana, 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 DLFand 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.