SEBI Slaps Rs 10 Lakh Penalty On DLF Ahead Of QIP Launch
It was in April when DLF announced its plan to become a debt-free company by launching qualitative institutional placement (QIP) by June and raise up to Rs 4,500 crore by issuing about 17.3 crore shares through the sale of shares to institutional investors. However, recently Securities and Exchange Board of India (SEBI) has slapped Rs 10 lakh penalty on DLF for making wrong disclosures with regard to utilisation of funds raised through initial public offering for the period June-December 2007.
In its filing, DLF said it had utilised an amount of Rs 3,143.56 crore towards prepayment of loans, up to September 30, 2007. However, as per the filing for October-December 2007, DLF had shown the utilisation of funds under the same head - prepayment of loans- as Rs 2,469.75 crore, which was decremental as compared to the previous quarter. According to the SEBI, there was no explanatory statement furnished by the noticee as to how the figures got decreased compared to the previous quarter.
However, now DLF had made a statement that its net debt has come down to Rs 5,512 crore from Rs 27,000 crore after its repaid the bank loans with the help of Singapore’s sovereign wealth fund GIC.
The entire episode might impact the launch of QIP and its reception with the investors.
What is QIP?
QIP is a way for listed companies to raise money, without having to submit legal paperwork to market regulators by issuing shares or convertible securities to a select group of person. The SEBI has formed the guidelines for this financing avenue in 2006 in order to keep Indian market from over depending on foreign capital. Also, only qualified institutional buyers are eligible to purchase such equities.
DLF is one of the largest commercial real estate developers in India, and has 25 million square foot (sqft) of leased office space in top Indian cities. It generate a rental of about Rs 1,950 crore annually. It was in 2017 when promoters of DLF sold their 33.34 per cent stake in its rental arm, DLF Cyber City Developers Ltd (DCCDL), to Singapore sovereign wealth fund GIC for Rs 8,956 crore. The company recorded net exceptional gain to Rs 4,111.95 crore for the quarter ended December 2017 as against Rs 98.88 crore a year ago.
Apart from this, DLF also develops residential as well as shopping malls in India. The company has a seven million sqft residential project in central Delhi, an 11.76-acre plot in Gurgaon and a 5.56-acre land parcel in the southern city of Chennai. This land bank will be used to develop commercial properties.