While DLF has not been able to cite other instances of where interest-free advances have been given, and over such long periods of time, a perusal of the books of various Vadra firms shows he used the advance to make other investments, including in several DLF properties. Interestingly, DLF officials who first said the company had got the plot in 2008-09, the year in which it gave Vadra the advance, now argue the firm saved money by not getting the property from Vadra earlier.
DLF agreed to buy the said plot, given its licensing status and its attractiveness as a business proposition for a total consideration of Rs 58 crore. As per normal commercial practice, the possession of the said plot was taken over by DLF in FY09 itself and a total sum of R50 crore given as advance in instalments against the purchase consideration. After receipt of all requisite approvals, the said property was conveyanced in favour of DLF, the companys statement issued on October 6 said.
The delay in getting the land registered has surprised experts who track the sector and have audited the account books of real estate firms. Normally, conveyancing of land gets done very quickly, especially for big developers. However, if one legally challenges the delay, both sides can cite several reasons for it, experts FE spoke to said.
DLF sources say the delay in getting the land registered in its name was deliberate since the market at that time was going through a slowdown. Had we got the land conveynanced in our name during 2008-09 we would have to pay the balance R8 crore to Vadra immediately, plus another around R4 crore towards registration charges, DLF officials told FE.
By delaying it till August-September this year we actually made savings of interest cost. The year 2008-09 was a time of slowdown and the company was not looking at immediately launching any project then, DLF officials said. Never mind that, by the same logic, the company lost interest on the larger Rs 50 crore advance nor has DLF explained what security it gave this advance against since the value of land only increased after the Haryana government changed its land use.
Though Vadra's Sky Light Hospitality sold the land to DLF in 2008-09, the former's balance sheet of 2009-10 shows the Rs 50 crore advance from DLF as liabilities instead of income. Since Vadra had bought the land for Rs 15.38 crore and sold it to DLF for Rs 58 crore he made a neat profit of Rs 42.62 crore on the deal, which is not shown in the balance sheet of either 2008-09 (the year in which DLF fist claimed it had taken possession of the land) or in 2009-10 or even 2010-11 the 2010-11 balance sheet shows Rs 58 crore of advances since Vadra got other advances from DLF as well. In which case, the profit Vadra has made from the transaction will likely be reflected in the 2011-12 balance sheet when it is filed with the registrar of companies.
DLF says that for the Manesar land, which it valued at Rs 58 crore, the advance of Rs 50 crore was paid to Vadra in three instalment of Rs 5 crore, Rs 10 crore and Rs 35 crore during 2008-09. The first was when Vadra got the leter of intent from the Haryana government, second instalment was paid when Vadra got the actual licence from the state government to develop the land and the final instalment when all the other approvals and clearances were procured.