Will take a call at its board meeting on July 28.
DLF, the country’s largest property developer, today announced plans to dilute majority stake in its wholly-owned retail management subsidiary, DLF Brands, probably to a promoter group company.
In a filing to the Bombay Stock Exchange (BSE), KP Singh-promoted DLF said, “At its meeting on July 28, the board may consider, review and recommend the proposal for further issue of equity shares by its wholly-owned subsidiary DLF Brands Ltd (DBL).”
DBL would issue the equity shares to a promoter group company or any other strategic investor, it added. “Upon further issue of preferential equity shares, DBL will cease to be a subsidiary of DLF Ltd.”
“The company will not fund the plans of DBL henceforth. Fresh money will either come from DLF promoters or investors. DLF’s stake will come down to minority,’ said another company executive, on condition of anonymity.
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According to DLF’s annual report for 2008-09, DBL had posted a net loss of Rs 7.41 crore on a turnover of Rs 47.39 crore.
The executive said the move was part of DLF’s announced strategy to exit from non-core business and cut its total debt. The exit from non-core ventures such as retail is expected to help DLF reduce a third of its total debt of Rs 15,000 crore in this financial year.
“After the board’s approval, the matter will go to the Annual General Meeting for shareholders’ consent. Morgan Stanley and Enam Securities have conducted independent valuations of DBL,” another company source said.
DBL declined to comment.
DLF is also scouting for buyers to sell stake in its luxury hotel chain, Amar Resorts. The sale is expected to fetch DLF around Rs 2,000 crore.
Earlier DLF’s plans to sell its multiplex arm, DT Cinemas, to PVR hit a block as the latter called off the deal citing pending compliances by DT cinemas.
DLF has dropped its plans to exit the wind power business as it is doing well, according to the executive.
DBL, whose mandate was to launch and expand international brands in India, launched DKNY in the country and opened three stores in Delhi.
DLF Brands has tie-ups with men’s wear brand Boggi and luggage brand Piquadro, sunglass brand Sunglass Hut, French firm Sia Home, among others. DBL had earlier announced major expansion plans with the objective of having 600 retail stores and bringing around 15 global brands to India by 2012-13, at an investment of Rs 750 crore.
DLF stocks today closed 0.51 per cent higher at Rs 323 on the BSE.