Real Estate Column


Yogesh Sood

At the next edition of the Indian Premier League (IPL) you are unlikely to hear easily excitable cricketers-turned-commentators screaming about “DLF Maximums” when batsmen send cricket balls hurrying into crowded stands like teargas canisters for six. For 5 years since the inception of this successful cricketing league, millions of cricket viewers of the Twenty20 format have heard the word DLF uttered, well, almost a million times. But from the year 2013, the commentators have to stop screaming out what they did in the past, and change over to “Pepsi Maximums”.

You guessed right. Real estate giant DLF is no longer the title sponsor of the IPL. Instead, you’ll hear commentators literally pushing Pepsi down your throats each time say KP-1 (Kevin Pietersen) or the other equally big KP-2 (Kieron Pollard) send the ball scudding into the stands. The cola giant showed much spunk and left its nearest rival, Airtel, way behind to take over the IPL sponsorship for the next five years at a whopping Rs 396 crore through a bidding process initiated by the Board of Control for Cricket in India. The amount is approximately twice that of what DLF paid for a 5-year title sponsorship back in 2008, i.e. Rs 200 crore. The rest of those who picked up bid documents developed cold feet and fizzled out of the sponsorship race.

The point I’m trying to make is that while DLF may say that it has got its money’s worth from the IPL sponsorship, no title sponsor worth his salt easily lets go of its exalted position, not at least in the game of cricket in India. Just take a look at the Sahara Group that has continued to sponsor the Indian cricket team for over a decade and a half, its various trials and tribulations on other fronts notwithstanding.

So why did DLF pull out? The answer may not be hard to find if you take a deeper look at Indian real estate markets. The song and dance phase is clearly over. Apartments and villas are no longer selling like they used to until two or three years ago. There’s been a recession, and even big players like DLF have unsold property. They know that with monies locked up in sundry projects, it wouldn’t be prudent to take up the sponsorship of the IPL once more, even if the amount of about Rs 400 crore, by DLF’s high standards, may not seem as big as it would to many of its rivals. After all, any sponsorship buck must translate into the big bang spend by consumers, isn’t it?

The challenges before DLF are deep. There are issues on the debt and sales front. The company is looking to sell various assets which include a Mumbai mill land and Aman Hotels to raise as much as Rs 7,500 crore by March 2013. By doing so, it expects to reduce its staggering debt of Rs 22,750 crore. In the third quarter of 2012, the company saw a 45 per cent drop in its net profit due to rising interest rates, commodity prices and slower home sales. The forecast from the firm hasn’t been anything to cry out “DLF Maximum” either. “With the macro environment continuing to remain unfavourable due high interest rates, commodity and labour cost inflation... it may take a few more quarters for the company to regain full momentum,” DLF said in a statement after Q3 results.“ Well then, with property giants undergoing a reality check, the momentum has shifted to the cola companies. Let’s hope the fizz is back in the world of real estate soon. India needs it.

—Consulting Editor Yogesh Sood can be reached at:


December 2012

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