DLF issue on hold till Nov

Company has withdrawn its prospectus on problems with minority shareholders.

DLF Ltd, which planned India's largest initial public offering (IPO) of Rs 13,600 crore, today withdrew its draft red herring prospectus in the backdrop of a dispute between the promoters and minority shareholders.

Bankers to the issue said the company could not get the "final observation" from the Securities and Exchange Board of India (Sebi) within three months of filing the prospectus. Consequently, the company withdrew the issue.

Ramesh Sanka, chief operating officer of DLF, said the withdrawal of the prospectus was exclusive of the company's ongoing problems with its minority shareholders.

"The matter is before the Ministry of Company Affairs; so I cannot comment on how long it will take for this issue to be resolved," he added.

DLF's minority shareholders had complained to Sebi that they were denied participation in the company's rights issue in September 2005. The Rs 35 crore rights issue of debentures had raised the promoters' stake in DLF to 99.5 per cent.

The company plans to file a new prospectus around November to re-start the IPO process. The minority shareholder issue is expected to be resolved before that.

A DLF executive as well as an official with the Ministry of Company Affairs said the company's dispute with minority shareholders should be resolved shortly, before DLF filed its prospectus.

Stock market sources said DLF was also advised by bankers to rework the IPO valuation. The delay in its IPO had impacted DLF's expansion plans, real estate sources told Business Standard.

Industry sources said land deals that DLF had originally planned to put through were on hold because the delay in the IPO had choked the anticipated flow of funds.

The prospectus DLF had earlier filed with Sebi stated it would require Rs 2,886 crore for wrapping up ongoing deals.

DLF executives, however, refuted the industry's claims about unfinished land deals. "For our plans in the next 10 years, we have 100 per cent land banking for our residential and office business," said Saurabh Chawla, senior vice-president (finance), DLF.

"In the last four months, there have been many positive developments such as an increase in the land bank, forging of new joint ventures and winning new projects. We need to update our valuation and inform our potential investors," said Sanka.

"Our internal accruals and bank loans would be more than enough to finance the complete process of acquiring land," he added.

Some of the company's new land acquisitions include 20,000 acres in Manesar and 5,000 acres in Kolkata. Besides this, DLF had doubled its land bank in Gurgaon by adding another 3,000 acres, DLF executives said.

In the last few months, the company has taken loans in excess of Rs 2,500 crore. DLF's debts today exceed Rs 7,000 crore.