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Project Appraisal and FinancingSubmitted by,
Banumathi.R
Anusha.MJagannath.G
Niveathetha.V
Prabu. M
Manoj pon spurgeon.S
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ABOUT DLF
DLF- referred as the Delhi Land and Finance
The DLF group- founded by Raghuvendra Singh in 1946
First development- shivaji park in Delhi
In mid 1970- started developingDLF city project at Gurgaon.
Upcoming plans include hotels, infrastructure and special
economic zones-related development projects
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ABOUT DLF
Headed by Kushal Singh.
The company is having a gross operating profit of Rs. 5985.98
Crores in March 2010.
Profit After Tax & Monitory interest is Rs.4468.19 Crores
Recent developments include residential, office and retail
properties.
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Capital structure ofDLF Info City Developers
(chandigarh) ltd
DLF has a debt equity ratio of 10.6%
The major factors included inDL
F ltd are
Cost
Nature of asset
Business risk
Control consideration
Market conditions
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Pros and Consof public and private sources:
The DLF info city developers (Chandigarh) ltd, have obtaineda secure loan of Rs. 238.26 crores it consists of both short
term & long term borrowings.
The DLF has obtained secured term loan borrowing from the
following banks
1. IL&FS Trust Company Limited
2. GE Capital Services India
3. Infrastructure Development Finance Company
limited
4. Axis BankLimited - Trust Series
5. Axis BankLimited - DAS Trust Series
6. Housing Development Finance Corporation
Limited
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Year Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009
Current ratio 0.148 0.142 0.085 1.074 2.303 3.077
DLF has taken a term loan the current ratio which is about 3.077 by theend of March 2009. This shows their ability to pay the term loan.
The negative working capital shows that the project is facing serious
financial trouble or they generate cash so quickly and so they actually
have a negative working capital.
Year Mar 2004 Mar 2005 Mar 2006 Mar 2007 Mar 2008 Mar 2009
Working capital -6 -6 -12 -6 -3 -0.7
Working capital
Current ratio
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Inte
rnal acc
rual
su
sed
Nearly 40 crores is charged as depreciation from 2006- 2009.
This is an internal source of fund for the organization. There
was no depreciation charged in the year 2005.
Year 2006 2007 2008 2009
Amount in Crores 4 6 27 2
Break-up of the Depreciation charged
Year 2005 2006 2007 2008 2009
Amount in
Crores-0.12 -24 -29 -22 1
Retained Earnings:The company shows negative balance for years 2005 to 2008. It shows a positive
balance for the year 2009.
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Cont..
Internal Accruals = Depreciation + Retained Profit. So, by
adding up we get
The company made positive Internal Accruals only in 2008
and 2009. All the other years there were negative internal
accruals. This shows that the company does not use internal
accruals effectively to source its financing activities.
Year 2005 2006 2007 2008 2009
Internal
Accruals-0.12 -20 -23 5 3
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Financial Instruments Used
Financial instruments can be categorized into two types:
1.Cash instruments.
2.Derivative instruments.
DLF has used borrowings from corporate bodies, group and
associated bodies, debentures and bonds and fresh capital to raise
their funds.
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Financial Instruments Used
The fresh capital was Rs.33.11 crore during march 2005.
Borrowings were Rs.30.55 crore when the project was started
in March 2005 and increased to Rs.116.26 crore in march
2009.
Rs. 30.55 crore was borrowed from corporate bodies, group/
associated bodies during march 2005.
Borrowings from corporate bodies, group/ associated bodiesduring the year 2009 was -122.
The firm increased its external sources of fund to Rs.121.03
during the year 2009.
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Firms dependence on domestic capital as
againstInte
rnalizati
on
Some of the domestic capitals used by DLF are,
1. Secured loans
2. Unsecured loans
3. Zero deferred credit Here, the unsecured loans are very less compared to the
secured loans.
DLF doesnt depend on any international capital.
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Benefitsof the internationalization of capital
markets
Diversification of risk.
Individual investors, major corporations, and individual
countries all usually try to diversify the risks of their financialportfolios. The reason is that people are generally risk-averse.
The trend in the late 1990s was for corporations to issue
securities that attracted investors from all over the world.
Even though they has several advantages as mentioned above,
International capital markets are not focused by DLF.
One factor that is to be considered primarily is the forex rates
or the foreign exchange rates and rates keep on fluctuating.
If the firm buys the loan from an international capital market,
there may be an uncertainty in the value to be repaid.
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THANK YOU
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