Thursday, March 01, 2012

DLF Business Model Suspect

Here is the news 

Verbatim
"Canadian research firm Veritas has slammed realty major DLF Ltd, calling its accounting practices “conflicting” and pointing at gaps in its business model — charges the company termed “mischievous and presumptive”. Earlier, Veritas Investment Research had come out with damaging reports on other Indian firms, including Reliance Industries, Reliance Communications and Kingfisher Airlines.
Veritas has said DLF’s stock is at best worth Rs 100, and the company may have to recast its loan. DLF said “the company adhered to the highest standards of corporate governance and financial integrity”. “We do not generally comment on individual research reports. However, this report in question is presumptive and mischievous as the analysts have never contacted the company to seek any information or clarification,” a DLF spokesperson said . “The audited financials of the company are always in the public domain,” he added. Following the report, the DLF stock price dropped 5.5 per cent on Thursday, becoming the biggest loser on the Bombay Stock Exchange, closing at Rs 214 after an opening of Rs 224."
Source: Moneycontrol ticker


- Source Business Standard (link 1)

Stock price chart
http://www.google.com/finance?chdnp=1&chdd=1&chds=0&chdv=1&chvs=Linear&chdeh=0&chfdeh=0&chdet=1330634199048&chddm=391&chls=IntervalBasedLine&q=NSE:DLF&ntsp=0

Later Times of India trying to assuage market fears by claiming that DLF is crying foul
http://economictimes.indiatimes.com/markets/real-estate/news-/dlf-says-report-that-hit-its-shares-mischievous/articleshow/12100095.cms

28 comments:

Anonymous said...

At what point will the people of India and GOI wake up and say, Indian citizens deserve to live a decent life and not like animals. Poverty in India is adisgrace, time to make money, by hook or crook. Look at China, pushes the World around, because the Government of China does not seek 'approval' from other Countries. Do what you must, the rest is garbage.

skeptic optimist said...

@ above -

Stop Complaining about GOI - You elect GOI and comparing to US or China!!!

India is democratic - if you don't like the way it is run either try to fix it by voting or by just migrate out.

As someone said here, the easiest way to ensure rapid change in democratic rule is keep voting out the incumbent and spread the word to vote out the incumbent till you are satisfied

Anonymous said...

Sure.

We are going to see DLF below 100 Rs in the coming RE crash.

Anonymous said...

Why would there be crash? Is anybody complaining about unaffordability to meet their obligation? What is trigger?

Anonymous said...

Indian companies (and of all the sectors, Real Estate!) have suspect accounting? Un-freakin-believable...

On a more serious note, how many MBAs can recall their ethics or moral science course (if they ever took one, that is)

Anonymous said...

You should also put a tag for "unscrupulous media", "paid news" and "TOIlet paper of India"

samix said...
This comment has been removed by the author.
samix said...

@skeptic optimist, even if all like minded people in India voted against the incumbent, they wont be able to push them out, democracy, as it is practiced today is a failed system.

Look at the western elite, they are already moving towards the "rule of the technocrats", after they have completely exploited the west under the pretext of democracy. We are currently in that exploitation stage today in India.

Democracy where every Tom, Dick and Harry who knows nothing about anything is allowed to vote and is considered at par with someone who knows something is only in the favor of the exploitative elites, it only gives a false sense of security and control to the sheep, rather this blog is a manifest proof of this fact, inspite of so many Indians wanting to buy a house for their own and a decent lifestyle, they can't and India is the largest democracy in the world.

aam aadmi said...

I for one think that democracy is functioning exactly the way it should. Look at our government, it's a living breathing larger than life version of our society.

1. Pampering to religious leaders (check)
2. No kissing in public but pissing is ok (check)
3. Corruption (check)
4. No individual freedom (check)
5. Hypocrisy (check)
6. Caste politics (check)

I could go on but you get the point. Even if you go down to the state level, you will see the exact features of the people more or less getting reflected in their respective governments.

The problem is not the politicians, it's the electorate.

Change is most of the times brought about by dedicated individuals working against the wishes of the society. How many politicians oppose khap panchayats, if the Supreme Court hadn't stepped in the menace wouldn't have stopped. IMO the more democratic the organization the more incompetent it tends to be.

Crucification of DLT said...

Ouch! Watch this video, see how DLF gets crucified.

http://www.moneycontrol.com/video/fii-view/dlf-inflated-asset-base-via-dealingsdal-veritas_675777.html

Anonymous said...

Even if every incumbent got voted off every 5 years, it could be decades before a decent government can be in place. It is a pipe dream. Rest of India needs to learn from Narendra Modi and his economic success in Gujarat. The rest will fall in place.

Anonymous said...

Some days back HDIL was bouncing cheques..these jokers do not have any money. They are deep in debt. I have always wondered about these morons saying that buyers are sitting on the fence, but prices will not come down. If you take 200 million people and presume that each one is sitting on about 200K dollars..the combined buying power is going to be 4 Trillion dollars..How can DLF, HDIL etc..compete with that? For how long..because most people have this kind of money and are not in debt. On the other hand DLF, HDIL etc..have debt servicing costs! Well it would be instructive to see what happens in the next 3-4 years.

skeptic optimist said...

I meant vote out the incompetent - not the ones that work.

A totalitarian state like China, oligarchies like US and Russia, Technocracy like Germany and Japan can work too - so do ex colonial powers like Britain, France (spain and portugal) and their vassal states.

But many of these countries have either had a bloody rebellion in the past, or have fought wars to capture resources and interests.

Any shift in the Indian system now will needs 3/4th majority of one party which is unlikely to happen or a civil war or nationwide insurgency which is also very unlikely.

Here is a blog I wrote on how India could switch to a pseudo-presidential system - this could solve some issues.

http://derango.posterous.com/retro-fit-presidential-system-for-parliamenta

skeptic optimist said...

Link to blog -
here

You can leave any more suggestions there too ...

Realty Minister said...

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Anonymous said...

More crises http://w3.newsmax.com/a/aftershockb/video47.cfm?promo_code=D30F-1

Listen to this with a pinch of salt

Weak Monsoon said...

India is expected to have a weak monsoon. Historically an above average winter like the one we have been facing in India.
Above average winter leads to a harsher summer which can lead to drop in farm yields. In addition, harsher summer leads to weak monsoon.
So Interest rate cycle will not moderate. Expect things to get tight.
http://business-standard.com/india/news/weak-monsoon-forecast-puts-agriculture-ministryguard/466673/

In other news, investors at many parts of Mumbai are exiting. This is ancedotal as i have been looking around for a while and negotiating power is coming back to buyers albeit slowly. Watch this space.

DLF is in Deep shit. Lodha is in deep shit, Kalpatru is in deep shit. Smaller Developers are in deeper shit. The painted smile ironically will fall off if there is a weak monsoon.

Pawan said...

@Weak Monsoon:
negotiating power is coming back to buyers albeit slowly

That had to happen at some point of time. Just like stock markets had to rally. Reversion to mean always always works.

I was listening to a discussion on CNBC where they went deeper into the numbers and said that the YOY GDP for December, 2011 ending quarter has been -- hold your breath -- 2%. Yes. And I recently read articles which predict China's GDP growth for the next decade at 3%. I do not know if we will go that low but we are going below 6% for sure. The only hope for us - like rest of the world - is easy liquidity and low interest rates. If interest rates are not cut, there will be mayhem. Car companies are offering huge discounts to clear inventory and I expect real estate to go that way too.

Anonymous said...

It is sad that those who subsribed the IPO, got the shares and retained it have suffered due to bad management of these companies. Looks to me as whole RE industry is cheating Customers, Shareholders, Regulators, Tax authorities and perhaps labours & staff as well.

DLF has mobilized more than 10000 Crores from the public in one of the biggest IPO and it just bothers me that more funds seem to have spoiled the company. So as scores of companies who gathered money from public and went bust.

To me here is the lesson. Never invest in companies which borrows capital or has debt. Even pledging of shares by the owners is a sign of decline.

Unfortunately these companies are taking Kingfisher and Sathyam route knowing that government would bail them out for fear of NPA with PSU banks. No company is worried about debt burden and infact treated as free capital. All the IPO money and debt is diverted to owner needs leaving little to stakeholders.

Amaresh Ashok Gangal said...

Guys I am looking forward for a day when Dlf goes to a value of exactly 0 that being said K P Singh is hero in my eyes as he set such a big empire after starting business at late age.. But being economic forecaster that is what I see..

Artificial Grass said...

The veritas has the DLF's stock is the best worth in the company recast its loan.DLF the adhered to the highest standers of the corporate the governments financial integrity

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