Excerpts from Draft Red Herring Prospectus of DLF Universal, page 426, Promise vs. Perfomance - it is written that there was a right issue of debentures in 2005 and object of right issue of Rs 35 crore was to raise funds for increase in business activities.
Promise vs. Performance - Last Three Issues
The last three issues of securities, to public or existing shareholders, made by our Company are as follows:
(a) Rights issue of debentures in fiscal 2005 ;
(b) Rights issue of equity shares in fiscal 1989 ; and
(c) Public issue of redeemable debentures in fiscal 1983.
We had not made any projections in the offer documents for the rights issues made in fiscal 2005 and fiscal 1989 and for public issue made in fiscal 1983. The object of the rights issue made by our Company in fiscal 2005 was to raise funds for increase in business activities and to finance implementation of new projects.
This amount was collected in Jan 2006. At that time in company’s book there was Rs 3.5 equity capital and more than Rs. 350 crores as reserves.
In October 2005 all the lead managers were in touch with DLF universal planning for Rs 10,000 crores($2 Billion) mega IPO and were knowing that there was no need for Rs 35 crore. But greed took over the brains of these criminals and they did not want minority shareholders getting their 2.5% legitimate quota. They wanted owners stake to go upto 99.5% so that they get maximum valuation and no selling pressure so they conspired right convertable debenture offer. They could haave offered 70:1 bonus and results would have been the same. This is the reason the lead managers are showing May 10th 2006 as the date on which company gave authority to give due diligence certificate, and they gave the same to SEBI on the very next day May 11th. (It is common in corporate India to shake hands with the promoter group 6-12 months before the IPO)
The Midas Touch investors’ association has a different allegation. It has written to SEBI saying that DLF’s Earning Per Share (EPS) stated as Rs 12.84 is misleading and it ought to be Rs 1.32 as per Sebi guidelines.
Excerpts from Sucheta Dalal about DLF Universal IPO,
Things have changed a bit since the media predicted stratospheric valuations for DLF and its Rs 60,000 crore land bank. The market is volatile and shaky and the very institutional investors who were hot on the chase of realty investments are now using their clout to beat down valuations. In a booming capital market and in the midst of a realty bubble, DLF may manage to fend off these charges and even get a clearance from the MCA, but it doesn’t bode well in the long term if the company is seen as one that does not care about its minority shareholders.
If the company is allowed to get away with this, it would make a mockery of investor protection rules. Worse, it would encourage more companies to delist shares, restructure capital and go public again—always at the cost of minority shareholders.
ET reports that DLF has agreed to provide a separate quota during the mega IPO for those 1200 odd investors who held the stocks even after delisting. This is subject to approval from SEBI. This only means that DLF morally agrees to the fraud and crime it has committed.
DLF , Building Retail Space- Looting Retail Investors ;-)
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