The two cranes stationed at DLF's construction site at Lower Parel, with the name DLF Laing O'Rourke written on them in big bold letters, have hardly moved in the last one month.

Going by a source close to the company, the joint venture is falling apart.

DLF, India's largest realtor by market capitalisation, had tied up with UK-based construction major Laing O'Rourke to form the 50:50 joint venture on February 1, 2006. The two companies had invested Rs 500 crore and the JV was expected to undertake projects worth Rs 5,000 crore by 2010.

The two partners are going their separate ways, the source said. The reason? Laing wants to bid aggressively for infrastructure and construction projects such as railways and airways, but DLF,which is facing problem in its core business of real estate, is too apprehensive to put money in this area during these difficult times.

"Laing doesn't want to end up being just a contractor for DLF's projects."

Speculation was rife that the joint venture was in trouble after DLF announced it will stall development of projects announced earlier. DLF has suspended construction of 16 million square feet due to uncertainty in financial closure of the projects, mainly retail, hotel and commercial ventures.

With Laing intent upon exiting the business, DLF is keen to buy the 50% stake the UK-based firm holds in the JV. The valuation offered by the Indian realty major is between Rs 50 crore and Rs 100 crore, the source added.
Laing's exit, though, is seen as a major setback for DLF.

According to the source, Laing brought in construction expertise like easy shuttering and quicker techniques and it had ramped up its operations pretty well. Now, there is a question mark over the equipment it had brought in and whether it will take those away. The second concern relates to labour. Some people had joined the company due to Laing's expertise. It remains to be seen whether they will stick with DLF.

Analysts say, though the joint venture's break-up may not cause much material loss to DLF at this point in time, a major question is how it will pay Laing right now for acquiring the remaining stake, considering the company is itself trying to raise money for subsidiary DLF Assets, which has huge repayments to make to the parent.

Contacted, the company said, "DLF will not comment on market speculaton."
Pooja Sarkar DNA-Daily News & Analysis Source: 3D Syndication