DLF hugely indebted - Rupees 130 billion (WTF!)

DLF, the largest real estate player in the Indian Market with such a strong brand that they don't even need to market their projects & everything sells out just by the name, is really in a huge problem with about 130 million rupees debt in their books as on end of 2008...Yeah you read that correctly.

Thats not the real problem, the problem is that need to repay 43 billion rupees by June this year and how will they do it...by ofcouse selling real estate (their core business) but in these recessionary times not much people are investing in real estate so they are only left with the option of selling of their non-core businesses like wind power business (which is bound to become big in the coming years) & a lot of people are critizing this decesion but i think they are left with no options other than selling it and thats a real bad sign. They are also planning to sell away with the land that they had kept to be used for retail and other commercial projects and this is the situation of the company when experts believe that the markets are down for sure but have not hit the bottom & the worst is yet to come.

What DLF is just doing is that they are postponing the debt problem but not actually solving it.The markets are still in a correction phase so probably a time can come when they have to pay the other biliion rupee debts and they will find themselves back to square one with the same challenge but without the wind power business to postpone it further.

The other part of the story is that i have heard people that DLF & some other players are in a very comfortable position as they can afford to do major price cuts in their projects (upto 50%) & still not be in a loss. But they are already doing that, RIGHT... DLF projects are being offered at 20-30% discounts but still there arn't many buyers. The major problem for the realtor's are that huge amount of capital gets blocked in their projects & when they fail to find buyers then they land up in the same problem as DLF.

The sure thing is that it will be a real pain for DLF coz they are selling the wind power business as it's right now in a nascent stage but its bound to grow big & they must have planned to reap its benefits in the long term which now they won't be able to. No one knows how the situation & the condition of the real estate will turn up in the future. We should hope for the best as a major part of our economy is dependent on it.