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Even before “Vadra-DLF” deals, DLF was a suspect


 Even before “Vadra-DLF” deals, DLF was a suspect
DLF has always been in the limelight for all the wrong reasons. Even before Kejriwal revealing the "sweetheart" deals between Sonia Gandhi's son-in-law Robert Vadra and India's largest real estate developer DLF, the latter had a chequered past.

In a report on DLF titled 'crumbling edifice' earlier this year, analysts Neeraj Monga and Nitin Mangal of Research Firm Veritas had slammed the company's accounting practices, business model and management integrity, and concluded that the stock is at best worth Rs 100.


In fact, Vertas came down heavily on DLF and accused DLF of "questionable dealings" with privately held arm DLF Assets (DAL), which led to to a higher purchase price for DAL at the time of the merger of the two firms. DLF minority shareholders lost out in the process, the Veritas report said.

In July the Economic Times reported that more than a dozen investors dragged DLF to court, accusing it of hurting their investments in an east Delhi mall by converting it into an office complex.

The same report alleged that two months earlier, hundreds of home buyers in DLF's project in Chennai collectively moved the Competition Commission of India (CCI) accusing the company of extracting additional money under the garb of taxes.

Investors and buyers of homes across the country have been put to the test by buying into DLF properties, with several of them venting their anger against the company for a host of reasons.

On 30 June 2012, the company had a debt of high as Rs 22,680 crore. Brokerage CLSA in its report earlier this year had accorded a sell rating on the stock saying the realtor's large asset sales may not be enough to reverse negative cash flows.


The analysts said the company's 2011-12 annual report suggests that DLF's operating cashflows from recurring business need to improve by Rs 2,900 crore between financial year 2012 and 2014 just to prevent the debt level from rising. The company has been trying to monetize its assets over the last few years, but nothing much has fructified in pruning down debt.

The latest allegation by Kejriwal on favours extended to Robert Vadra by DLF may lead one to believe Kejriwal, given past allegations on integrity and financial impropriety against the company.

Whether DLF is a "crumbling edifice" as Veritas described, only time will tell.

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