DELHI LAND &FINANCE ± Strategy or SerendipityPresented by: Hari prakash jindal Manjula verma Neha jain Prabash singh Rashi nailwal Shubhra jain INTRODUCTION DLF was a real-estate developer in India primarily into development of residential, commercial and retail properties. They spanned all aspects of real-estate development, from the identification and acquisition of land, to the planning, execution and marketing of projects, through to the maintenance and management of completed developments. Since the founding in 1946, the business focused on real estate development in the National Capital Region, including Delhi and Gurgaon. App. Saleable/ Lettable area of Projects of DLF Area(million sq. ft.) Residential Commercial Retail TOTAL Completed Projects under Developments development 21.6 4.7 2.3 28.6 44.4 40.9 16.3 101.6 Planned projects 95.6 15.9 6.2 117.7 electric motors in a joint venture with Universal Electric USA & car batteries.Later on . It was a tedious &painstaking exercise as landholdings were small and ownership was divided between several family members. Singh slowly and gradually acquired parcels of land from farmers using STRATEGY of BUY NOW & PAY LATER delivering interest cheques on first of every month & providing money on call for emergencies. 1946. Mr. Did not succeed in any aforesaid venture and sold off. He built landmark residential colonies like Greater Kailash. . also developed 21 colonies in Delhi between 1947 and1961 by persuading farmers to sell their holdings on credit . all development in Delhi was taken over by DDA which forced DLF to diversify into batteries and cables.It was started by Chaudhary Raghvendra Singh. South Extension & Hauz khas. DLF had 30acres rural & deserted area which was not under DDA jurisdiction.INCEPTION Realty Giants DLF was incorporated as a company before INDEPENDENCE on September 18. It is our ACID TEST: will we remain No. DLF Universal. because of opening up the sector to foreign players.1? . Kushal Pal Singh. Mr. However the leadership is threatened.DLF is a leading professional managed company emerged as one of the foremost enterprise in a real estate development. said that he has been a champion of FDI in the construction industry. We are looking at property development in other states as well. CEO. We are expanding our organization substantially. law often expanded DLF to DAMN LUCKY FELLOW.Singh inherited the business as Chaudhary Raghvendra Singh did not have any sons.WINDFALL(S) Mr.Singh to secure licences & permissions to reclassify agricultural holdings as non ±agricultural & develop them. licences were cancelled and reinstated after a period of two years. his Father-in. took up cause. Singh¶s philosophy was to lobby for changing the law rather than breaking it. Bansilal became CM.. RAJIV GANDHI entered govt. . that enabled K. When Mr.P.Singh. Witnessing the success of K. But when Mr.K.P.P. Singh bought 1500acres of land.was a major achievement. However. . selfcontained. The transformation of barren expanses of farmland into a busy. The consultants valued these properties between Rs.853 billion. When prices tumbled.965billion and Rs. Then he built DLF City. so as to make people feel it was not a distant suburb of the city . Gurgaon had more social cachet.DLF cleverly called its first project Qutab Enclave after the historical monument in South Delhi . the land value was between Rs. suburb that became India¶s call centre capital .066 billion and after deducting the notional developer profit of 20%. Although FBD & GBD were also emerging but neither had Gurgaon¶s appeal.772billion and Rs. Asian µs largest 3. Multinational companies that found South Mumbai or South Delhi too expensive located their head offices at Gurgaon.000 acre township in Gurgaon south of Delhi just across the Haryana border. there were few takers for Gurgaon in the 1980s. Being closer to farm houses of the rich & famous.1. Still. g. Commercial Development They built. of residential space. ft. Krishna Nagar.BUSINESS LINES Residential Development They build and sold a wide range of properties including houses . was completed soon after independence in 1949. they developed over 8.with a focus on higher end of the market. e. They implemented innovative approaches to the development and marketing of residential projects and were one of the early developers to focus on theme based projects. The Magnolias development in DLF City. leased and sold commercial office space. which included a GOLF COURSE. The first residential colony.800 acres of colonies and townships and developed or launched over 20million sq. with a focus on properties attractive to large multinational tenants built to international standards .duplexes and apartments of varying sizes . Since then. COMMERCIAL REAL ESTATE DEVELOPMENT Infinity Towers DLF Cyber Green Kolkata Towers Chandigarh Infosys Park Ericsson DLF Centre 1.3 2003 1989 2004 1992 . The first commercial development was DLF Centre opened in 1992 The majority of other commercial properties were in DLF City.0 0.2 0.3 0.9 1.7 2004 2004 2004 2004 2006 2005 2005 2005 0. Gurgaon. shopping centers. prime downtown shopping districts. focused on developing. they became one of India s leading developers. The firm also planned to diversify into development of SEZs . managing and leasing or selling shopping malls.Retail Development The retail business line.leisure and entertainment options viz. established in 1940s. and development of hotels. DLF had six-retail real-estate development formats catering to the entire spectrum of the retail market to serve the needs of customer with different buying patterns and purchasing power.infrastructure construction through joint venture with Laing O Rourke plc. DLF had MOU with TRENT. including cinema complexes. destination malls and super luxury malls having aesthetic design. neighbourhood malls. . These formats were standalone stores. cinema complexes. they were developing air-conditioned mega malls and other retail spaces. high quality infrastructure . Since 2001. food courts and restaurants.By2006. retail business of TATA GROUP and with Metro Cash& Carry for joint development. 2 0.3 0.STARTED COMPLETED 2004 2003 2000 2000 1993 1119 1028 1421 2000 14 4520 4003 4676 1256 2460 DLF mega mall DLF city centre Galleria Super Market 1 Park-N-Shop 0.3 0.3 0.01 2002 2001 1996 1996 1992 . .a preliminary agreement was entered into with the landowners for the purchase of the land. Project Execution Its process commenced by obtaining regulatory approvals based on area¶s marketability. The proper concept was finalized with architects & consultants to maintain high health &safety standards in all real estate developments. After a preliminary land title evaluation and review by local lawyers .PROJECT IMPLEMENTATION PROCESS Land Identification and Acquisition The land acquisition team monitored real estate markets and emerging trends by assessing selected markets to identify cities and localities with development potential. target customers & potential returns. The co. Most of the sale bookings were at project sites. facilitated provided convenient access to finance to customers and also shared some advertising costs.. approaches included launch events. Relationships with various banks & housing finance cos.. In commercial & retail business lines.120 brokerage firms marketed the properties. Sales teams had positive & negative compensation incentives tied to their sales performance. web mktg. mktg. through to the transfer of property to the new owner. was through property consultants & relationships with existing tenants. commercial & retail business lines. . as well as newspaper &outdoor advertising. Mktg. corporate presentation. although sales were also made at the corporate offices. Approx.Sales and marketing Three sales & marketing departments were maintained for residential. A client servicing team served the customer from the booking process. direct & indirect mktg. encouraged participation of former buyers or tenants in the new product launches & was concluded both directly to customers &through brokers. 893 acres of land across the country. commercial & retail developed area of approx. resp. ethics & customer service and to thereby contribute to & benefit from the growth of the Indian economy.2006. Sq.. ft.Strategy DLF had a mission to build a world-class real-estate development co. Diversify into SEZ development: SEZs were a new concept in India . & provide attractive fiscal incentive for both developers & tenants. with the highest standards of professionalism. ft. DLF identified 62 cities & by APRIL 30.. totaling over 118m. hospitals & hotels. ft. & 6million sq. Expand core business lines nationally: DLF evaluated projects throughout India. 16million sq. The 7 key elements of business strategy included: Increasing land reserves in strategic location: For growth strategy.96 million sq. Each SEZ would be developed as an integrated township & include residential.. involving the development of residential.. ft. .they had partial payments to acquire 2. commercial & retail space as well as schools. Undertake Infrastructure Development: DLF entered into a joint venture with Lang O¶Rourke plc. Move to a sales revenue based business model: DLF adopted a new business model. a leading UK-based construction co. based on the development &sale of commercial & retail properties. Enhance execution capabilities: To improve the construction quality a substantial part would be outsourced to the DLF Laing O¶Rourke joint venture. The Joint Venture would create the opportunity to exploit new sources of revenue & new opportunities in the core business area. harbours. such as clubs. runways & power projects. . with a strong track record of major construction projects globally for projects including bridges. pipelines. five-star & deluxe segments & other tourism& leisure related assets. tunnels. Diversify into Hotel Development: DLF planned to developed100 hotels in the four-star. & golf courses. DLF planned in the hospitality sector. The Indian real-estate sector divided into: ORGANISED SEGMENT: comprised of private developers.Ansal Properties and Infrastructure Ltd. They were actively considering townships. .INDUSTRY AND COMPETITIVE SCENARIO The real-estate development industry in India. while Rahejas established hotels in association with Marriott. Unitech ltd. It comprised small builders &contractors . UNORGANISED SEGMENT: Acconting for over 70%of the housing units constructed. the Hiranandani group forayed into Hotel through its hotels µRodas¶. the Raheja group & Gesco. Hudco. multiplexes&shopping malls to derive their business prospects.g. govt. the Hiranandani group.. In Mumbai. although fragmented. was highly competitive with most of the real-estate developers having a city specific or region specific presence.housing bodies & private realestate developers like DLF. state. e. or govt.. . affiliated entities. as a consequence of . burgeoning middle. Development in the real estate sector were driven by: Demand for more housing units in cities & towns because of growing urbanization of Indian population. The growing trend of urbanization coupled with the factors like faster growth in incomes in the middle & higher income categories. decline in EMIs due to the fall in housing finance rates &availability of tax incentives on housing loans were pushing up the requirements for housing units in cities & towns. Firms faced competition from large domestic & international property development & construction cos. among other things. expenditure on infrastructure & various policy initiatives for the development of SEZs. the amenities provided and developer¶s reputation/title. the relaxation of the FDI policy for real-estate sector.class. rising govt. Increased disposable income. Projects were funded through the promoters¶ contribution & intra group loans. . easy availability of housing finance at cheaper rate & tax incentives. The margins on a residential property varied depending upon the location of the project. Demand for office premises by growing IT industry esp.25 billion by 2007-8. but also made people more brand conscious. Demand for multiplexes by evolving entertainment sector. . BPO. the propensity of spending a large portion of their income on tours & travels was going up. India was emerging as a major destination for global tourism which in turn pushed up the demand for hotels /resorts across India. The boom witnessed in the service sector not only pushed up the disposable income of the urban population. The growth in IT/ITES was likely to translate into real estate investments of RS. resulted in higher sale of branded goods. Demand for shopping malls by growing retail segment. With the increase in PDI. India was a preferred destinations for setting up back operations. Growth of multiplexes was driven by favourable government polcies Demand for hotels /resorts by growing tourism industry. it would extent to other cities like Surat . Pune & Ahemdabad. Initially mall development restricted to major cities like Mumbai & Gurgaon. they would retain the management of the mall.sq.ft.sq.in line with the changed business model. Thus.000sq. they would retain ownership of retail developments & even if they sold the units in mall. whereas they previously developed & leased. DLF planned their growth for each of the three segments.2m.ft. as well as the ownership of the key common areas . charging a management fee from the tenants.THE ROADS AHEAD DLF was in the process of adopting a new business model for commercial & retail properties. They intended to develop & sell.& out -of -town destination malls would each have approx. However. DLF planned city centre malls ranging in size from 200.ft.to 1m. The size of the malls would also increase due to consumer demand for greater retail diversity &size would be an important determinant of the success of a mall. . in order to control the quality of the retail space & maintain an appropriate mix of tenants. Chandigarh. where local authorities had insufficient funds to build low-income housing themselves. Ludhiana. . Mumbai. Chennai. Bangalore. N. Gurgaon. Because such arrangements were effectively using the private.8 acres of land in N.D. Pune & Shimla. They also won a bid together with a joint venture partner to acquire 35. Jaipur. They acquired 23 acres of land for a super luxury residential development in chanakyapuri. which would be used for residential development. which includes certain proportion of low income housing in the development. PLANNED RESIDENTIAL REAL ESTATE PROJECTS DLF planned to built this across India. DLF expected similar arrangements in other municipalities across India. Goa. This development would a µPublic-Private partnership¶ between the joint venture & the DDA. land for township development in & around Amritsar.sector to finance public sector housing requirements. & were acquiring .D. Indore. with about 20 malls in north India. PLANNED COMMERCIAL REAL ESTATE PROJECTS IT &ITES were driving demand for commercial real estate. although a number of destination malls were also planned for the outskirts of India¶s major cities. PLANNED RETAIL REAL ESTATE PROJECTS A significant proportion of DLF¶s planned malls would be situated in prime city centres. DLF planned to develop extensive commercial properties in selected cities. built to international standards in order to attract multinational tenants & further strengthen their position as a leading developer of commercial realestate. . hospitals. DLF outbid ITC & the Raheja group to acquire a 5.DLF set up plans to develop integrated or µmulti ± product¶ SEZs. commercial and retail facilities. DLF constructed16 storey Hilton hotel off EM Bypass in KOLKATA forRs. and captive power generation facilities..54acre Calcutta Metropolitan Corporation plot on which it was planning to develop a 5star deluxe hotel in partnership with Hilton International. as well as schools. which include residential accomodation. . clubs and golf courses using their existing real estate capabilities as well as joint venture to build these assets. Hotels DLF was also looking at developing hotels in 4-star. 5-star and deluxe segments in other tourism and leisure related assets. They identified 21 sites for the hotels. such as service appt. hotels and other support infrastructure.154cr.NEW BUSINESSES Special Economic Zones DLF perceived an opportunity window when GOI took measure to encourage foreign investments in &exports from the country . Compliance & respect for all community. environmental & legal requirements. . Sustained efforts to enhance customer quality &value. DLF MISSION To build world class real-estate businesses across six business lines with the highest standard of professionalism ethics.quality& customer service.DLF VISION. DLF VALUES Ethical &professional service. MISSION AND VALUES DLF VISION To contribute significantly to building the new India & become world¶s most valuable real-estate company. THE VALUE CHAIN TECHNOLOGY DEVELOMENT DLF provided maintenance & management services for power distribution. DLF service was ISO 9001:2000 certified which appealed to multinational clients who expected superior quality standards. pest control. parking mgmt. janitorial services. central air conditioning. Most of these operations were outsourced to qualified & experienced vendors with DLF services taking responsibility for developing standard operating procedures .. qualified &motivated with a high reputation for project execution. security services. maintenance schedules & addressing complaints. DLF power had 5 power plants in Eastern India of aggregate capacity of 55MW. GENERAL ADMINISTRATION The management team is highly experienced. back-up power generation. drainage pumping. water supply. fire detection & solid waste disposal &mgmt. . WHO EXPECTED SUPERIOR QUALITY STANDARDS. . ethical & professional conduct.individual dignity & adherence to honest. a closely held company of the promoters by renouncing it¶s 40% ownership & control in DLF Cyber City Developers Ltd. Ltd. transparent & effective governance.(DAL). PROCUREMENT DLF LTD has acquired 60% ownership & control in DLF Assets Pvt.-it¶s 100% subsidiary still it is proudly termed as a cashless transaction. maintenance schedules & addressing complaints. HRM The Co¶s philosophy on corporate governance is built on a rich legacy of fair. DLF is committed to a fair& competitive free market system. This includes respect for human values . DLF SERVICES WAS ISO 9001:2000 CERTIFIED WHICH APPEALED TO MULTINATIONAL CLIENTS. This enables customers & all stakeholders to be partners in the Cos. Most of the operations mentioned at ³x´ above were outsourced to qualified & experienced vendors with DLF services taking responsibility for developing standard operating procedures. growth & prosperity. SWOT ANALYSIS STRENGTH Employment &Training opportunities in the field of construction. Construction of the multi building projects on the feasible locations in the country. . Sufficient availability of raw material & natural resources in the country is supportive for the industry. Low cost well-educated & skilled labour force is now widely available across the country. Private sector housing boom & commercial buildings demand. External allocation of large contracts becomes difficult. WEAKNESS Chances of Natural disadvantage are there. Distance between construction projects reduces business efficiency. Training itself has become a challenge. Lack of clearly define processes &procedures for construction & its management. Improve in long-term career prospects is highly required to encourage staff retention & new entrants. Changing skills requirements & an ageing workforce may accentuate the skills gap. Huge amount of money need to be invested in this industry. . More flexible training delivery techniques are now available. . Public sector projects through Public Private Partnerships will bring further opportunities. Renewable energy projects will offer opportunities to develop skills & capacity in new markets. Financial supports like loan & insurance & growth in income of people is in support of construction industry. OPPURTUNITES Continuous private sector housing boom will create more construction opportunities. Developing supply chain through involvement in large projects is likely to enhance the chances in construction. Historical cultural heritages like the TAZ MAHAL encourage & provide a creative platform for the industry. THREAT Current economic situation may have an adverse impact on construction industry. Political & security conditions in the region & Late legislative enforcement measures are always threats to any industry in India. Natural abnormal casualties such as earth quake & floods are uncertain & can prevent the construction boom. . Insufficient accessibility in planning & concerning the infrastructure . Infrastructure safety is a challenging task in construction industry. 96 358.16 400 333.2 100 68.08 212.92 305.54 263.01 235.88 dlf ansal group parsavnath unitech 373.9 200 135.26 0 2001 2002 2003 2004 2005 .63 286.73 497.8 247.Comparison of revenue in real state developers 600 537.8 176.33 412.01 300 256.7 500 503.55 112. 19 ansal parshavnath unitech 2.58 16.01 dlf 19.54 -60 .99 18.31 9 12.72 0 2001 -6.15 2003 2004 2005 -40 -43.Comparison of operating profit in real state developers 100 80 77.33 40 23.98 60 42.5 71.12 10.45 20 10.19 -20 -22.43 19.81 2002 -2.92 -5. 77 50 dlf parshvnath 40 37.83 20 10.18 36.38 80 70 65.97 8.89 60 47.02 20.Profit after tax major real state developers 90 80.539.19 6.09 18.32 10.87 unitech ansal 30 25.07 10.53 28.41 14.64 10 0 2001 2002 2003 2004 2005 .74 11.42 14. the competitive landscape is less competitive (closer to monopoly) NEW ENTRANTS DLF PAT is already high in comparison to it¶s competitors. Demand is inelastic. SUBSTITUTES No close substitute. DLF is differentiated because it is continuously implementing innovations in the construction & booking.5 FORCES STRATEGY RIVALRY AMONG INDUSTRY DLF has a high ratio of market share(almost to monopoly). With only few firms holding a large market share. This characteristic protects the high profit levels of the firm in the market which prohibits rivals from entering into the market. High concentration ratio that indicates a high concentration of market share. Threat of substitute mainly has an impact on the industry through price competition . Many other industries were also depend on this industry. So buyers are concentrated because there are fewer buyers with significant market share. . BUYERS DLF has acquired a significant portion of land for construction. SUPPLIERS The suppliers to the DLF are also getting benefits by rising of the industry. . located close to DLF Cyber Green. INFINITY TOWERS Designed by Hafeez Contractor .19km.from Delhi international Airport DLF EXCLUSIVE FLOORS 19km from airport & 7km from Cybercity. service lifts.MAJOR DLF REAL ESTATE DEVELOPMENTS TRINITY TOWERS Located 5km. a multi-level car park &power back-up facilities.consisted of 3 interconnected multi storied tower. comprised 172 plots. DLF CYBER GREEN It consists of 5 multi-storied towers.from Cybercity. high speed elevators. p Gateway tower(Gurgaon) . THE ARALIAS. DLF PLACE.THE MAGNOLIAS.8acre DLF MEGA MALL Located in phase 1 of DLF city in Gurgaon .provides parking for 800 vehicles. DLF CITY CENTRE Situated in Gurgaon along Mehrauli-Gurgaon development. road.housed cinema complex &many restaurants.2.JASOLA. . COURTYARD MALL Located in Saket targeted an affluent catchment area.DLF IT PARK KOLKATA.WESTEND HEIGHTS.