With the DLF IPL craze reaching a crescendo, the surfeit of cricket scores and statistics drove me to delve deeper into the acronym for the phenomenon. And I’m not talking about IPL, but DLF. Delhi Land and Finance or DLF is arguably India’s leading real estate Development Company, with revenues of about $35 Billion, and in 2007 a market capitalization greater than $30 Billion. K.P.Singh, the head of the group has really transformed fragmented holdings of agricultural land into a modern metropolis. He is now one of the world’s wealthiest men (8th in the Forbes list). The transformation of vast acres of undeveloped land into one of India’s most modern places, Gurgaon, with sleek office towers, shopping malls, multiplexes, upscale homes and condominiums, has been an extraordinary feat. The question is how was this feat possible in India’s Paralytic political climate? What came as an even bigger surprise was that DLF has been around from 1946, before partition (Whoaa!!). Most of the posh South Delhi area has been developed by DLF.
K.P.Singh married DLF founder: Raghuvendra Singh’s daughter and inherited the company and thus began his association with DLF and his tryst with destiny. His entry into the family business coincided with India’s changing land policies. In 1957 the Delhi Development Act (DDA) was passed which made the land development a concern of the state. This would have made DLF and similar operators crestfallen, and situation became even grim with the socialist shift in 1961 with a total elimination of private sector in urban development. This was also the time when a plethora of fly-by-night developers started operating under the state patronage. During the sixties, DLF totally went in the background.
During Prime minister Rajiv Gandhi’s (wish he could have still been alive..) regime things started to look up. He saw the potential to business, when the state got out of the business of being in business. In Mr. Singh’s words “You know these three and a half thousand acres on which DLF sits? The government did not just hand it to me and say :”Go Build””.The process of acquiring land had been a slow, painful and laborious activity. Mr. Singh negotiated with 700 familes each having 4 to 5 acres. Dealing with such a heterogeneous society was no mean task. Pacifying hostile family members, dealing with various stake-holders , some even living miles away from the land was a torrid time. According to him, assemblage of land remains the biggest problem in developing it. Unlike in other countries (read China), a bull-dozer couldn’t have been run over the occupants. Even if one of them went to court, the litigation that would have followed would have kept Mr. Singh busy for all his life.
The modus operandi was pretty simple. Take a loan from one farmer, and then promptly use it to buy additional land. The farmers became the bankers and DLF became the bank for them. It was literally all about trust. The interest was delivered to the farmers personally, something which cannot be imagined nowadays. The business model followed the contemporary U.S. Businesses that consolidate so-called fragmented industries. The farmers were brought together to accomplish with the large properties, what individual farmers could never have imagined. DLF still operates in much the same way. Brokers, sometimes represent unknown buyers and sellers, and often brokers don’t known one another’s identity (reminds me of a scene from “Khosla ka Ghosla”, where Navin Nischol mouths “Aap broker hain ya party?”). The identity crisis helps DLF to buy the land at less than its actual worth due to government distortions that constrict effective land supply: Urban Land ceiling and Regulation Act.DLF’s success story has definitely been a massive entrepreneurial feat. Though it is a part of India’s big developers which do profit unduly from the opacity of the land market and are complicit in perpetuating such opacity. The widespread suspicion of a nexus made of the mafia, the media, builder and politicians is also rife. But it is definitely compensating for a state that resists development for fear of treading on individual property rights and also doing its popularity no harm by sponsoring Mano-Ranjan ka Baap:IPL.
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