As part of a strategy to exit its non-core businesses, realty major DLF today announced plans to dilute the majority stake in wholly-owned retail management subsidiary DLF Brands, probably to a promoter group firm.
In a filing to the Bombay Stock Exchange, the country's largest realty company said: "The board, at its meeting on July 28, may consider review and recommend the proposal for further issue of equity shares by its wholly-owned subsidiary DLF Brands (DBL)."
DBL will issue the equity shares to a promoter group company or any other strategic investors, it added.
"Upon further issue of preferential equity shares, DBL will cease to be subsidiary of DLF ," the filing said.
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.
According to industry sources, the move is part of DLF's announced strategy to exit from non-core business and focus only on developing realty projects.
The company's board will "most probably" issue fresh equity shares to a promoter group company, they added.
"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," a source said.
As per 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 DLF Brands spokesperson declined to comment on the matter.
Earlier, DLF had planned to raise Rs 2,700 crore this fiscal through the sale of non-core assets as part of its plans to reduce net debt of Rs 16,421 crore by Rs 5,000 crore.
DLF had decided to raise Rs 5,500 last fiscal through sale of non-core assets, but was able to raise only Rs 1,800 crore. It has decided to retain the wind energy business, valued at Rs 1,000 crore, because of tax benefits.
"Divestments of non-core assets as a strategy is to focus more on the core business operations and not merely as a means to reduce debt. However, all cash flows from this process will be utilised to bring down debt," the company had said in its analyst presentation, while declaring results for 2009-10.
