Realty major DLF received a setback last week when the High Court of Punjab and Haryana cancelled an earlier auction bagged by the company for ₹1,703 crore in 2009 to acquire 350.7 acres of prime land in Gurgaon. The stock was down over 8 per cent on the news, but closed the week 1 per cent lower.
But the loss of the land will not impact any of DLF’s current projects. It is also likely that the company may not bid in the next auction, given the slowdown in Gurgaon, its primary market.
The company sold only 0.44 million sq ft (msf) in its New Gurgaon project in 2013-14 as against its target of 2.5 msf per year. DLF has been facing a slew of legal and regulatory hassles. The company was in the news two weeks ago when the Supreme Court directed DLF to deposit ₹630 crore, until the announcement of the final verdict in a case filed by CCI.
Other issues relate to its luxury project in Kochi that was put on hold after the Kerala Government cancelled a clearance. Earlier in the year, the company forfeited nearly a quarter of the ₹901 crore paid in 2007 to the Delhi Development Authority.
The company’s profit has been on a downtrend since the peak year of 2007-08. In the June quarter, net profit fell 29 per cent year-on-year to ₹128 crore. DLF’s net debt stood at ₹19,064 crore as on June 2014. If the Government returns the bid amount for the cancelled auction, it will help ease the company’s finances.