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Real Estate Hygiene

DLF and KP Singh are face of the Indian real estate business. How DLF conducts itself and what standards it sets for itself will have an impact that will be felt far beyond its customers and shareholders

By now, anyone who glances at the business pages or TV channels even casually, knows all about the DLF story. We all know that the stock markets have valued DLF as one of the ten most valuable companies in India, being worth more than the State Bank of India, for instance. We also know that the promoter KP Singh's family, which still owns about 90 per cent of the company, is now worth around Rs 85,000 crore and is therefore fourth richest in India and one of the richest in the world.

Of course, if the DLF public issue had gone through as planned last year, KP Singh could have become the richest Indian. As things stand he is considerably poorer than Mukesh Ambani who is worth Rs 1,50,000 crore, although I'm not sure if poorer is the word I am looking for.

In the weeks before the DLF issue, one of the things that was often said was that the company's going public would help professionalise and institutionalise the Indian real estate business. Well, there's no one who would deny that real estate is a business that desperately need of such change.

Here are some of the things that people at large widely believe about the Indian real estate sector: Cash dealings play a huge role, even though this is lower than earlier. Strong political and physical muscle is a must-have to succeed. Many real estate businesses are a front-end for politicians and others who have gigantic amounts of unaccountable cash. We all believe these things to be true at every level from the small-time property dealer who carries around bagfuls of currency and has pals at the local 'thana' all the way up to big guys who are rumoured to have top-level politicians as their secret business partners. This is a big problem.

If the starry-eyed vision that Indians see as their rightful future is to come true, then the real estate sector has to play a huge role. And since the scale of money needed to fulfil this role can only come from the public, the real estate sector will have to make a clean break from its murky past and reform itself.

The lofty heights that KP Singh has taken his business, places a unique responsibility upon him and his company. For better or for worse, DLF and KP Singh are now, far more than earlier, the face of the Indian real estate business. How this company conducts itself and what standards it sets for itself will have an impact that will be felt far beyond its customers and shareholders.

In a way, it isn't bad that this role has fallen upon DLF than any others. People who know this business acknowledge that in comparison to other large realty outfits, DLF is a far cleaner business.

There will now be an unending queue of real estate IPOs. The serial killers of our stock exchanges have been sharpening their knives.

Companies that changed their businesses to software in 1999 have been changing it to real estate at a rapid pace for some time. However, it is up to DLF to set the example for extending its reputation for hygiene to how the public companies of this industry treat its shareholders. This country deserves a real estate business of a very different kind than it has had. The ball is very much in Mr Singh's court now.