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BL Research Bureau

After building itself a strong base in North India, DLF’s foray into the South does not appear to pose too much of a challenge.

DLF’s bagging of the New Bangalore City township project from the Bangalore Metropolitan Regional Development Authority, more firmly establishes a pan-India presence for the company and signals its strength in bidding for and winning global tenders (32 Indian and international consortia initially bid for the order).

The company, which is still awaiting a formal project award letter, said it has won the Bidadi township order worth over Rs 50,000 crore in a 50:50 joint venture with Limitless of the Dubai World Group, which manages the portfolio and businesses of the Dubai Government.

The project would entail development of a self-sustaining township consisting of residential, commercial and retail developments spanning over 9,000 acres. While DLF has prior experience of developing DLF City in Gurgaon, the current project is almost thrice the size of DLF City and is in addition a project awarded by the Karnataka Government.

DLF has been making big strides in preparing itself to tackle huge projects. For one, the company has been entering into partnership ventures with leading international players such as UK-based Laing O’Rourke to scale up its execution capabilities.

It has also entered into tie-ups with another group company of Dubai World – Nakheel, for townships in Gurgaon, Maharashtra and Goa. Second, the company has been making progress in forging dedicated supply agreements with vendors for project inputs, to leverage economies of scale.

Third, DLF has also periodically sold its commercial property to its sister concern DLF Assets (DAL), to unlock cash flows to plough into future projects.

With the latter preparing itself to list as a real estate investment trust in Singapore, the concerns over DAL’s ability to pay DLF for these sales, also appear to have eased. Finally, DLF has not only doubled its headcount to 3,500 employees in the last two years, but has also recently acquired a stake in Feedback Ventures, an integrated infrastructure projects management and advisory company, whose board includes financial institutions such as HDFC and IDFC.

Given DLF’s pan-India presence and the scaling up of execution capabilities through technical financial partnerships, investors may be willing to view the stock as a good proxy for the entire Indian real estate sector.

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