DLF's K P Singh

24 July 2007

India''s richest builder Kushal Pal Singh became a trillionaire when the share price of his flagship company DLF soared on Monday, and the company''s total market cap overtook Infosys.

However, analysts say the numbers seem to conceal more than they reveal, for DLF''s financial reporting seems to be based on book profits, rather than on actual cash flow.

In the first quarter, DLF reported a net profit of Rs1,524 crore, but a negative cash flow of Rs2,270 crore, owing to a huge 150 per cent jump in sundry debtors; aggregating to three-fourth of its quarterly consolidated net sales. While most builders book advance bookings to boost toplines, analysts say DLF''s numbers seem higher than most.

DLF raised Rs9,625 crore from a highly successful IPO last month. Had it not been for the IPO, say critics, DLF could have faced a cash crunch, especially after the company declared a 100 per cent dividend, including the new shareholders. The payout amounts to around Rs 340 crore, and they are asking whether the company is making the payout from the IPO proceeds.

The scrip, meanwhile, shot up by around 5 per cent on DLF''s successful bid for the Dwarka convention centre. DLF is India''s largest real estate company and owns development rights for over 55 million sq metres of real estate, of which 50 per cent is in the National Capital Region (NCR) and 25 per cent in Kolkata.