DLF’s Three-Year SEBI Ban, a Nightmare For Home-Buyers and Investors?
In a cat-and-mouse chase between SEBI and DLF, the investors of DLF are likely to take the ultimate beating, with several under-construction projects hanging by a thread after SEBI’s fundraising ban on DLF.
In a verdict passed on Monday, the Securities and Exchange Board of India (SEBI) decided to debar India’s real estate giant DLF’s access to the Bombay Stock Exchange. Not only has this decision caused turbulence in the DLF’s realty business, but has also left several investors and home-buyers in a muddle. The decision, particularly comes as a huge disappointment for people who have invested in several DLF projects, which are under-construction.
DLF, along with promoters KP Singh and Rajiv Singh has been barred from carrying out any kind of dealings in securities for a period of three years. This affects the corporate entity heavily, as the lack of capital market access for three years would result in insufficient funds to complete ongoing projects.
The company will have its hands tied and will not be able to raise any equity to retrench debt or raise any more loan funds. With a net debt of over Rs 19,000 crore as of June 2014, this definitely screams bad news. While DLF is going to be gravely affected by this, the people who have invested in a number of under-execution DLF projects are going to suffer the most, if these projects cannot be funded and face a delay in completion.
While there is no fruitful outcome of playing the blame game, DLF’s shame in the eyes of SEBI can be pointed back to its promoters and managers. This unusually harsh decision given by SEBI is, after all, the result of inadequate disclosures in IPO.
Few bankers believe that guilty of active and deliberate suppression, DLF is now at the mercy of SEBI, and will be forced to sell assets, which might even include unfinished projects to meet their debt obligations.
However, keeping their chin up and keeping the hopes of their investors alive, DLF announced on Tuesday that they would defend themselves against any untoward findings that are found in the order passed by the market watchdog SEBI. The real estate giant and its legal advisors are giving it their all to turn the tables around and come out clean from this unfortunate misconduct.
Source: Economic Times
DLF India, dlf projects, home buyers, real estate investors, SEBI, Securities and Exchange Board of India
