At a time when the market is abuzz with speculation over DLF's Mumbai land sale, Toronto-based research firm, Veritas Investment Research, has come out with a contrarian view, claiming the developer may not sell it before 2014, looking at 'personal gains'.
In its report, shared with Business Standard, Veritas has said it does not believe the NTC Mill land in Mumbai is up for sale at present, as the DLF management wanted to hold on to it till 2013-14, when its ownership share in the properties would increase.
In March, Veritas had released a synopsis of its report on DLF to the media.
Without commenting on the Veritas report, Sriram Khattar, senior executive director, DLF, said: "As already disclosed in the third quarter (2011-12) analysts' presentation, we are in the process of divesting certain non-core assets, including Mumbai mill land, during the current financial year."
DLF is learnt to be in negotiation with several players at this point for selling the 17-acre plot in Mumbai.
Even as some analysts seemed to suggest DLF may not like to sell the prime land till the market recovered, others argued the developer needs to cut debt urgently and, therefore, may not be able to hold on to it for long.
The Mumbai land sale is part of DLF's plan to raise Rs 7,500 crore (Rs 75 billion) by March 2013 through non-core asset sales.
Its debt was Rs 22,758 crore (Rs 227.58 billion) as of December 31, 2011.
According to the Veritas report, DLF Cyber City Developers Ltd, a subsidiary of DLF, issued nine per cent compulsory convertible preference shares of Rs 1,597 crore (Rs 15.97 billion) to DLF's management, which are to be converted into common equity shares not later than five years from their date of issue.
Upon conversion, the management would own a 40 per cent stake in not only DLF Assets Ltd but also in DCCDL, which owns some of the most valuable land in India, including the NTC Mill land in Mumbai and 373 acres of DLF City land in Gurgaon.
These prime lands, some of the most valuable holdings of DLF, were transferred by the management to DCCDL during the DCCDL-CARAF merger, the report says.
CARAF was the management-owned holding company for DAL.
The summary of the Veritas report released in March had described DLF as a company under 'duress', and that its stock price should not exceed Rs 100.
While the report had impacted the DLF stock for a few days, this had regained value soon after.
DLF's Khattar told Business Standard, "We do not generally comment on individual research reports.
"However, this report in question is presumptive and mischievous, as the analysts have never contacted the company to seek any information or clarification."
He maintained "the company adheres to the highest standards of corporate governance and financial integrity and the audited financials of the company are always in the public domain."
With the conversion of preferred shares by2013-14, DLF's minority shareholders will lose 40 per cent ownership in the most important land base in India (referring to DCCDL), the Veritas report said.
Neeraj Monga, executive vice-president, Veritas, said shareholders, as witnessed during the DCCDL-CARAF merger, are not a priority for the incumbent management of the company.
"We believe Indian financial institutions will soon be at the receiving end of this unfolding saga as well," Monga said.
DLF countered these allegations, again saying the Veritas report was mischievous and presumptive.
Veritas had earlier come out with reports on other Indian companies, including Reliance Industries, Reliance Communications and Kingfisher.
It is working on yet another report on an Indian company, but the Canadian research firm has not divulged the name.