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With towering aspirations & a strong brand equity, DLF is all set to create newer highs... on concrete, of course!
“Buy
land. They’ve stopped making it!” That’s precisely what Mark Twain (pen name of Samuel Langhore Clemens) once remarked, with more than a touch of humour, of course. But could he have ever imagined that those words could make more than just business sense more than a century later? Surely not! But it’s true and none can deny it in face of the current boom in the Indian real estate market; with Twain having found an admirer for himself in the form of a real estate giant – Delhi Lease & Finance, better known as DLF. And what more, riding the boom, K. P. Singh, Founder & Chairman, DLF Group – the pioneer of India’s organised real estate sector has not only increased his personal wealth manifold (becoming India’s third trillionaire during June 2007) by riding the boom in the sector, but also has redefined urban India; redefining homes, offices and shopping malls and infrastructure.From a small time struggling coloniser 30 years back to becoming the star of Indian realty’s astronomical growth, with a conservative earnings estimate of Rs.80 billion expected in FY 2007-08, the real estate icon has only grown, further, higher, faster ... into a titanic, tearing apart all icebergs in its path – a story well told by its operating margin which have increased from a moderate 27.2% in 2003-04 to a colossal 60.8% in 2006-07! Today, it is perhaps regarded as the entity which made a ‘modern hi-tech and towering urban India’. Why you ask? What after it metamorphosised the way modern India looks today? And the company is still hungry to grow more. Need a proof? Well, what about its announcement on December 4, 2007 to invest a further $2 billion on its IT SEZs (having already invested $1 billon)? Apart from developing over 21 urban colonies, today, it has the DLF City to its credit, spreading over 3,000 acres of land in Gurgaon making it one of the hottest realty destinations. And to believe that none, yes we repeat it – none had faith in the project when K. P. Singh started it! Really, a visionary indeed!
DLF’s commitment to quality, customer sensitivity and its ability to deliver on promises has not only paid back in cash, but also in kind, with the company being regarded as the giant which almost single-handedly built the city on the outskirts of the national capital, brick by brick. And its IPO in June 2007 which helped DLF raise Rs.91.88 billion was oversubscribed 2.75 times, demonstrating the public faith in the competence of the realty giant (especially considering that it all happened at a time when the last six months, prior to the IPO, had witnessed an erosion of about 25% in the M-cap of realty stocks!). Today, with Rs.1,615.89 crores as M-cap, DLF is the fifth largest Indian company and its share prices have appreciated by over 80% since its IPO release to reach Rs.947.85 (as on November 30, 2007). So what has actually led to DLF reaching the zenith of success? Firstly, its brand value and reputation, which of course had gained weight due to its on-time delivery and completion of huge projects on time.
Secondly, its extensive land reserves, and all thanks to the visionary K. P. Singh who understood what Twain said long back. Currently, the DLF Group has over 224 million sq ft of existing development and 738 million sq ft of planned projects. Apart from these, DLF has a tradition of constant innovation (it first developed the idea of township in India, DLF City in Gurgaon) and its dedicated management team (with average tenure of senior management being well over a decade!). Satish Kannar, Analyst, Arihant Capital Markets Ltd., while commenting on the admirable status of DLF, says, “The sheer 40-years-old existence of the company is the biggest plus point for DLF. There have been some new entrants in this field, as new as 3-4 years, because of the boom, but DLF has remained focussed on the sector. Its focus towards its core strength sans diversification plans over time has helped it become a leader in this sector.”
A close look at the company’s journey exemplifies that the core business has now extended from homes, offices and shopping malls to hotels, infrastructure & SEZs. Today, the home business has extensive range of products, including duplexes, row hoses, condominiums and apartments of varying sizes, with a focus on the higher end of the market. DLF is also expanding its old business, with over 375 million sq ft area under housing development projects. Its office segment is yet another admired business division. DLF can also rightly be called the patron in the office spaces with almost 32 million sq ft developed area and another projected 62 million sq ft aimed to give it over 20% market share in the business & commercial sector. Fascinatingly, with the boom in Indian retail, Singh has created more than 42 million sq ft of new shopping and entertainment complexes across the country. Now that’s a perfect concretisation of quality and quantity...
With the growth in the Indian economy and the rise of the ‘great Indian middle-class consumer’, DLF visualises enormous opportunities in these primary divisions and other fields like SEZs and hospitality. As real estate in India experiences a paradigm shift, DLF, with its strong brand equity and focus on its core competence, will continue to cement a stronger India.
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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