DLF consolidates all realty verticals under 2 divisions
The Economic Times, May 22, 2009, Page 6
Abhishek Gupta ET NOW
DLF, India’s largest realty company, has consolidated all its real estate verticals under two divisions as part of a restructuring exercise aimed at leveraging synergies and imparting greater customer focus.
The company till now had six verticals in the real estate division: retail, offices, commercial, homes, SEZs and hotels. Now, the retail, offices, IT parks and SEZ verticals will form part of the rental division, headed by A S Minocha, chairman of DLF Commercial Developers. The homes and commercial complex verticals will move to sale division headed by the MD of the company TC Goyal.
Confirming the development, DLF group CFO Ramesh Sanka, told ET NOW: “We have aligned some of our departments such that we could improve operational efficiency of the company”. Sanka added that this is only an operational restructuring with no plans of job reduction. In 2008-09, the company reduced its employee strength from 3700 to 2882.
DLF formed these six verticals during its IPO in 2007. Each of them were supposed to be listed at a later stage. With a crash in the real estate market and the stock markets not conducive for listing, the company has put these plans on hold. After the restructuring, the verticals will still remain legal entities, but will work in a more collaborative manner.
According to a company executive, the reason for the restructuring was to tap synergies in sales, marketing, construction and new product launches. The executive added that DLF believes relationships with its customers can be strengthened by approaching them as a single unit. With central decision making, the company can also focus more on divisions which will give better returns and faster cash flows. This move comes a few months after the company had merged its non core functions like HR, Legal and Accounting into a single team.
Both Goyal and Minocha are veterans in DLF and have spent more than a decade in the company. Recently two of its group heads; AD Rebello and Yogesh Verma quit. Rebello who headed the homes division has now joined Bharti while Verma, who headed DLF’s SEZ division, has joined the P R Jindal group.
Company insiders say after the departure of these two senior executives, the restructuring will not ruffle too many feathers in the company. Another top level executive told ET NOW on condition of anonymity that TC Goyal will look after the larger chunk of the business once the two verticals are firmed up.
This restructuring comes in the wake of DLF beefing up its balance sheet in a difficult business environment. The promoters recently sold around 9.9% stake for nearly Rs 3900 crore. The company has also decided to sell its wind power business, a large chunk of its hotel business, and various other assets to raise more than Rs 10,000 crore.
The realty slowdown hit DLF hard and made the company scale down its plans. Its total developable area has fallen by more than 40%, from 751 million sq ft to 425 million square feet, mainly due to its exit from the Bidadi & Dankuni projects. Even the area under development has fallen from 61.4 million sq ft to 36 million sq ft with DLF putting several of its office building projects on hold.
The Economic Times, May 22, 2009, Page 6
Abhishek Gupta ET NOW
DLF, India’s largest realty company, has consolidated all its real estate verticals under two divisions as part of a restructuring exercise aimed at leveraging synergies and imparting greater customer focus.
The company till now had six verticals in the real estate division: retail, offices, commercial, homes, SEZs and hotels. Now, the retail, offices, IT parks and SEZ verticals will form part of the rental division, headed by A S Minocha, chairman of DLF Commercial Developers. The homes and commercial complex verticals will move to sale division headed by the MD of the company TC Goyal.
Confirming the development, DLF group CFO Ramesh Sanka, told ET NOW: “We have aligned some of our departments such that we could improve operational efficiency of the company”. Sanka added that this is only an operational restructuring with no plans of job reduction. In 2008-09, the company reduced its employee strength from 3700 to 2882.
DLF formed these six verticals during its IPO in 2007. Each of them were supposed to be listed at a later stage. With a crash in the real estate market and the stock markets not conducive for listing, the company has put these plans on hold. After the restructuring, the verticals will still remain legal entities, but will work in a more collaborative manner.
According to a company executive, the reason for the restructuring was to tap synergies in sales, marketing, construction and new product launches. The executive added that DLF believes relationships with its customers can be strengthened by approaching them as a single unit. With central decision making, the company can also focus more on divisions which will give better returns and faster cash flows. This move comes a few months after the company had merged its non core functions like HR, Legal and Accounting into a single team.
Both Goyal and Minocha are veterans in DLF and have spent more than a decade in the company. Recently two of its group heads; AD Rebello and Yogesh Verma quit. Rebello who headed the homes division has now joined Bharti while Verma, who headed DLF’s SEZ division, has joined the P R Jindal group.
Company insiders say after the departure of these two senior executives, the restructuring will not ruffle too many feathers in the company. Another top level executive told ET NOW on condition of anonymity that TC Goyal will look after the larger chunk of the business once the two verticals are firmed up.
This restructuring comes in the wake of DLF beefing up its balance sheet in a difficult business environment. The promoters recently sold around 9.9% stake for nearly Rs 3900 crore. The company has also decided to sell its wind power business, a large chunk of its hotel business, and various other assets to raise more than Rs 10,000 crore.
The realty slowdown hit DLF hard and made the company scale down its plans. Its total developable area has fallen by more than 40%, from 751 million sq ft to 425 million square feet, mainly due to its exit from the Bidadi & Dankuni projects. Even the area under development has fallen from 61.4 million sq ft to 36 million sq ft with DLF putting several of its office building projects on hold.
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