4. 2
Board of Directors
Executive Directors
Dr. K.P. Singh
Chairman
Mr. Rajiv Singh
Vice Chairman
Mr. T.C. Goyal
Managing Director
Ms. Pia Singh
Whole-time Director
Mr. Kameshwar Swarup
Senior Executive Director - Legal
Non-Executive Directors
Mr. G.S. Talwar
Dr. D.V. Kapur
Mr. K.N. Memani
Mr. M.M. Sabharwal
Mr. Ravinder Narain
Mr. B. Bhushan
Brig. (Retd.) N.P. Singh
Reference Information
Registered Office
Shopping Mall, 3rd Floor, Arjun Marg
Phase-I, DLF City, Gurgaon-122 002
(Haryana)
Corporate Office
DLF Centre, Sansad Marg
New Delhi-110 001
Statutory Auditors
M/s. Walker, Chandiok & Co
Registrar & Share Transfer Agent
M/s Karvy Computershare Private Ltd.
Listed at
Bombay Stock Exchange
National Stock Exchange
Company Secretary
Mr. Subhash Setia
5. 3
Dear Shareholders,
In my Message to you last year, I had shared my apprehension that the Financial Year 2008-09 could
prove to be a challenging year for your Company and that the liquidity, credit and inflationary pressures on
the domestic and global economies would impact the business scenario at large.
As you have witnessed, the year gone by, the entire global economy has been in the grip of severe
recession of unprecedented dimensions, adversely affecting all spheres of economic activity.
In the face of such challenging conditions, your Company has endeavoured to withstand the severity of the
economic slowdown by focussing on consolidating the position of the Company’s core business in order
to emerge stronger in the years ahead.
Your Company adopted and implemented strategies and managed to effectively service all its debt and
interest obligations, without restructuring any obligations. It ensured that all commitments to stakeholders
were fully met.
The Company has initiated strategic and comprehensive portfolio adjustments concentrating both on real
estate assets and non-real estate business, with a view to exit non-core businesses.
For your Company, Corporate Social Responsibility is not just an add-on; rather it is a business and social
commitment that is mutually reinforcing. It has been the constant endeavour of your Company to create
sustainable economies and transform stagnant lives into active partnerships through synergized proactive
hand-holding in areas of infrastructure, education, training, health and environment. Your Company has
initiated various measures in terms of improved and efficient construction methodologies, adapting energy
efficient and conserving technologies towards developing energy efficient buildings.
Message from the Chairman
6. 4
In my view, another major challenge for our economy is the provision of quality infrastructure whilst the
Eleventh Five Year Plan (2007-12) has estimated an investment requirement of US$500 billion (Economic
Survey 2008-09) in infrastructure for broad-based and inclusive growth. We all need to make our humble
contribution towards the success of this challenging task.
The future will throw many challenges and opportunities to the Company in terms of striking the right
balance between the profitability and sustainability. I foresee challenges for our business in terms of fresh
land availability, rehabilitation and taking care of the interests of the all stakeholders particularly from the
ecological perspective.
I assure you that your Company will face the challenges resolutely and turn these into strategic opportunities
to maintain its leadership position in the real estate business.
With best wishes
Sincerely,
New Delhi (Dr. K. P. Singh)
30th
, July, 2009 Chairman
9. 7
Notice
Notice is hereby given that the Forty-fourth Annual
General Meeting of DLF Limited will be held on
Wednesday, the 30th
September, 2009 at 10.00 A.M.
at Epicentre, Apparel House, Sector 44, Gurgaon –
122 003 (Haryana) to transact the following business:
Ordinary Business
1. To receive, consider and adopt the Audited
Balance Sheet as at 31st
March, 2009, the Profit
& Loss Account for the year ended on that date
together with the Reports of Directors and Auditors
thereon.
2. To declare dividend.
3. To appoint a Director in place of Mr. Kameshwar
Swarup, who retires by rotation and being eligible,
offers himself for re-appointment.
4. To appoint a Director in place of Dr. D.V. Kapur,
who retires by rotation and being eligible, offers
himself for re-appointment.
5. To appoint a Director in place of Mr. M.M.
Sabharwal, who retires by rotation and being
eligible, offers himself for re-appointment.
6. To appoint Auditors’ of the Company to hold
office from the conclusion of this meeting until the
conclusion of the next Annual General Meeting
and to fix their remuneration. M/s. Walker,
Chandiok & Co, the retiring Auditors are eligible
for re-appointment.
Special Business
7. To consider and if thought fit, to pass with
or without modification(s), the following
Resolution as an Ordinary Resolution:
“Resolved that pursuant to Article 93 of the
Articles of Association of the Company and in
accordance with the provisions of Section 198,
269, 309, 310 read with Schedule XIII and other
applicable provisions, if any, of the Companies Act,
1956 (the Act) (including any statutory modification
or re-enactment thereof for the time being in force),
the consent of the members be and is hereby
accorded to the re-appointment of Mr. Kameshwar
Swarup, as a Whole-time Director, designated as
‘Senior Executive Director – Legal’ for a period of
two years with effect from 1st
January, 2010 on the
terms and conditions including the remuneration
as set out in the Explanatory Statement annexed
to the Notice with liberty and authority to the Board
of Directors to alter, vary, modify and revise the
New Delhi
27th
August, 2009
terms and conditions of the said appointment and/
or the remuneration, from time to time within the
limits laid down in the then subsisting respective
provisions of the Act.
Resolved Further that in the event of absence or
inadequacy of profits in any year during the tenure
of his appointment, the aforesaid remuneration
will be paid as minimum remuneration to
Mr. Kameshwar Swarup.
Resolved Further that the Board of Directors
of the Company including any duly constituted
Committee thereof (hereinafter referred to as “the
Board”) be and is hereby authorised to do all such
acts, deeds and things including entering into such
agreement(s), deed(s) of amendment or any such
document(s) as the Board may, in its absolute
discretion, consider necessary, expedient or
desirable including to sub-delegate all or any of
the powers herein conferred on it, in order to give
effect to this resolution or as otherwise considered
by the Board to be in the best interest of the
Company.”
8. To consider and if thought fit, to pass with
or without modification(s), the following
Resolution as a Special Resolution:
“Resolved that pursuant to the provisions of
Section 314(1) and other applicable provisions of
the Companies Act, 1956 (including any statutory
modification or re-enactment thereof, for the time
being in force), the consent of the Company, be
and is hereby accorded to the appointment of
Ms. Savitri Devi Singh as ‘Vice President’, DLF
Commercial Developers Limited (DCDL), a wholly
owned subsidiary of the Company w.e.f. 1st
April, 2009
at a remuneration and terms & conditions as set out
in the Explanatory Statement annexed to the Notice.
Resolved Further that the Board of Directors
of the Company including any duly constituted
Committee thereof (hereinafter referred to as “the
Board”) be and is hereby authorised to take all such
steps as may be necessary, proper or expedient to
give effect to this Resolution.”
By Order of the Board
For DLF Limited
Subhash Setia
Company Secretary
10. 8
Notes
1. A Member entitled to attend and vote at
the Meeting is entitled to appoint a Proxy
to attend and vote on a poll instead of himself/
herself and the Proxy need not be a Member
of the Company. The Proxies to be effective
should be deposited at the Registered Office
of the Company not later than 48 hours before
the commencement of the meeting. Proxy
Form is attached.
2. The Explanatory Statement pursuant to Section
173(2) of the Companies Act, 1956 in respect of
Special Business as set out above to be transacted
at the meeting along with required details in terms
of Clause 49 of the Listing Agreement are annexed
hereto and forms part of this Notice.
3. M/s. Karvy Computershare Private Limited, Plot
No. 17-24, Vittalrao Nagar, Madhapur, Hyderabad
–500 081, Ph.: 040-23420815-28, Fax No.:
040-23420814, e-mail: mailmanager@karvy.
com, website: www.karvy.com is the Registrar
and Share Transfer Agent (RTA) for Physical
Shares. Karvy is also the depository interface
of the Company with both NSDL and CDSL.
However, keeping in view the convenience of the
shareholders, documents relating to shares will
continue to be accepted at Karvy Computershare
Pvt. Ltd., at 1105, 11th
Floor, Arunachal Building,
19, Barakhamba Road, Connaught Place,
New Delhi – 110 001, Ph.: 011-43503200 and
at the Registered Office of the Company &
also at Corporate Affairs Department, 1-E,
Jhandewalan Extension, Naaz Cinema Complex,
New Delhi -110 055.
4. Corporate Members intending to send their
authorised representatives to attend the meeting
are requested to send a certified copy of Board
Resolution authorising their representatives to
attend and vote on their behalf at the meeting.
5. The Register of Members and Share Transfer
Books of the Company will remain closed from
Thursday, 24th
September, 2009 to Wednesday,
30th
September, 2009 (both days inclusive) for
determining eligibility for payment of dividend, if
declared at the meeting.
6. The dividend, if declared at the meeting, will be
paid on or before 29th
October, 2009 to those
Members or their mandates:
(a) whose names appear at the end of the
business hours on Wednesday, 23rd
September, 2009 in the list of Beneficial
Owners to be furnished by Depositories
(NSDL and CDSL) in respect of the shares
held in dematerialised form; and
(b) whose names appear as Members on the
Company’s Register of Members after giving
effect to valid share transfer requests in
physical form lodged with Registrar & Share
Transfer Agent (RTA) of the Company on or
before Wednesday, 23rd
September, 2009.
7. Relevant documents referred to in the
accompanying Notice are open for inspection
by the Members at the Registered Office of the
Company on all working days, between 1400-
1600 hrs. up to the date of the meeting.
8. Members holding shares in physical form are
requested to advise about any change of address/
Bank account details to the Company or its
Registrar.
9. Members who hold shares in dematerialised
form may kindly note that their address and
Bank account details, as furnished by their
depositories to the Company, shall be printed
on the dividend warrants as per applicable
regulations of the depositories. The Company
cannot entertain any direct request from such
members for change in address/Bank account
details. Members who wish to change their
address/Bank account details are requested
to advise their Depository Participants about
such change.
10. Members desirous of obtaining any information/
clarification(s) concerning the accounts and
operations of the Company or intending to raise
any query, are requested to forward the same at
least 10 days prior to the date of meeting to the
Company Secretary at the Registered Office of the
Company, so that the same may be attended to
appropriately.
11. Pursuant to provisions of Section 205A(5) and
205C of the Companies Act, 1956 the Company
has transferred all unpaid/unclaimed dividends
upto the Financial Years 2000-01 to the Investor
Education and Protection Fund (the Fund) of
the Central Government. The Company is
in the process of transferring the unpaid
dividend for the Financial Year 2001-02 in
December, 2009. The dividend for the Financial
Years 2002-03 and thereafter, which remains
unpaid/unclaimed for a period of 7 years will be
transferred by the Company to the Fund. The
members who have not encashed their dividend
warrants so far for the Financial Years 2002-03
onwards are requested to make their claims to the
RTA or at the Registered Office of the Company.
11. 9
EXPLANATORY STATEMENT
Pursuant to Section 173(2) of the Companies Act, 1956
ITEM NO. 7
Mr. Kameshwar Swarup, a Whole-time Director designated as ‘Senior Executive Director – Legal’ of the Company is
Post-Graduate in Commerce & Law and a Fellow Member of the Institute of Company Secretaries of India, with over
46 years of management experience in a number of corporate positions to his credit. The present term of office of
Mr. Swarup will come to an end on 31st
December, 2009. Considering his capabilities and to enable the Company
to have benefits of his experience, the Board in its meeting held on 27th
August, 2009 on the recommendation of
Remuneration Committee, subject to the approval of the Members, has re-appointed him for a further period of two
years w.e.f. 1st
January, 2010 on the following terms and conditions:
I. Salary (Basic) Rs. 2,57,475 per month
II. Perquisites & Allowances Classified into three categories A, B and C
Category ‘A’
i) House Rent Allowance
70% of the Basic Salary per month or Company’s leased accommodation, subject to rental ceiling of 70%
of the basic salary .
ii) Personal Allowance Rs. 1,66,667 per month.
iii) Superannuation Allowance 15% of the Basic Salary.
iv) Hard Furnishings
Provision/Purchase by Whole-time Director of hard furnishings will be governed by the rules of the
Company, but shall not exceed a total value of Rs.15 lacs at any time.
v) Performance Award
Ranging between Rs. 25 lacs (minimum guaranteed) and Rs. 200 lacs (maximum achievable) per
annum, as per the policy of the Company.
Category ‘B’
i) Contribution to Provident Fund as per the rules of the Company.
ii) Gratuity payable shall not exceed half a month’s salary for each completed year of service as per the rules of the Company.
iii) Earned/Privilege Leave: As per rules of the Company.
Category ‘C’
i)
Provision of Company maintained
car with Chauffeur
Provision of Company maintained Chauffeur driven Car with all expenses paid on actual basis as per the
policy of the Company.
ii) Communication facilities
Expenses on communication facilities will be reimbursed as per policy of the Company and will not be
treated as perquisites.
The perquisite value of the above shall be evaluated, wherever applicable, as per Income Tax Act, 1961 and/or any rules framed thereunder.
III. Other Terms:
i)
He shall be entitled to reimbursement of entertainment expenses and other out-of-pocket expenses incurred in connection with the business
of the Company.
ii)
He shall be required to travel abroad for business promotion as and when required and all expenses incurred during such foreign travel will be
governed by the Company’s Policy regarding Foreign Travel.
iii)
The appointment may be terminated by either party giving the other party three months’ notice in writing on the expiry of which, the appointment
will come to an end. The Company may terminate his appointment by paying him basic salary for three months, in lieu of three months’ notice
in writing.
iv)
He shall not during the continuance of his employment or at any time thereafter divulge or disclose to any person whomsoever or make any
use whatever for his own or for whatever purpose, of any confidential information or knowledge obtained by him during his employment as to
the business or affairs of the Company and shall during the continuance of his employment hereunder also use his best endeavours to prevent
any other person from doing so.
It may please be noted that once the unclaimed
dividend is transferred to the Fund, no claim
shall lie in respect thereof.
12. Members are requested:
(a) To bring their copies of Annual Report, Notice
and Attendance Slip duly completed and
signed at the meeting. Not to carry briefcase
or bag inside the meeting venue for security
reasons;
(b) To quote their Folio No./DP Id and Client Id in
all correspondence;
(c) To note that no gift or gift coupons will be
distributed at the meeting.
Mr. Swarup will be responsible for day-to-day management of the Legal Affairs of the Company, subject to the
superintendence and control of the Board of Directors, and such other responsibilities as may be entrusted to him
from time to time.
12. 10
The Board considers that the re-appointment of
Mr. Swarup is in the best interest of the Company.
A brief resume of Mr. Swarup, nature of his expertise
in specific functional areas and name of companies
in which he holds directorship/membership of Board/
Committee, as stipulated under Clause 49 of the Listing
Agreement is annexed hereto.
Further, pursuant to the empowerment granted by the
Members at the 42nd
Annual General Meeting and as per
the policy of the Company and on the recommendation
of the Remuneration Committee, the Board in its
meeting held on 27th
August, 2009 has extended the
benefit entitling him to an amount equivalent to ‘Value’
(in rupees) of 32,000 equity shares of the Company. The
‘Value’ being the difference between the par value of
Rs. 2 per equity share and the average closing market
price of the Company’s share on NSE for a 30 days
period preceding the date of vesting. The aforesaid
benefit shall be deemed to have been granted as on
1st
July, 2008 (i.e. date of grant) and will be deemed
to vest in two equal tranches of 50% each - 1st tranch
on completion of two years from the date of grant i.e.
30th
June, 2010 and the 2nd tranch on completion
of three years from the date of grant i.e. 30th
June,
2011. In case of Mr. Swarup’s retirement between 1st
July, 2010 to 1st
July, 2011, the entire amount of 2nd
tranch shall be payable on the date of retirement. In the
unfortunate event of his tragic loss during the period of
his employment with the Company, his nominees/legal
heirs would be entitled to receive the entire/balance
amount towards aforesaid payments, as the case may
be.
None of the Directors except the appointee may be
deemed to be concerned or interested in the proposed
re-appointment and benefits extended to him.
The above may be treated as an abstract of the terms of
re-appointment and the benefits extended to Mr. Swarup
under Section 302 of the Companies Act, 1956.
The Board of Directors of your Company recommends
the resolution for approval.
ITEM NO. 8
Ms. Savitri Devi Singh, General Manager, DLF
Commercial Developers Limited (DCDL), a wholly
owned subsidiary of the Company, has been elevated
as Vice President, DCDL with effect from 1st
April, 2009.
Your Board of Directors, on the recommendation of the
Remuneration Committee, in its meeting held on 27th
August, 2009, subject to your approval, has approved
her elevation on the following terms and conditions
(Rs./month)
1. Basic Salary : 20,000
2. House Rent Allowance : 70% of Basic Salary
3. Conveyance Allowance : 52,500
4. Hard Furnishings : 4,167
5. Personal Allowance : 25,000
6. SAF Allowance : 3,000
7. Contribution to Provident : As per rules of the
Fund and Gratuity Company
8. Annual Performance Award : Ranging between
Rs. 4.60 lac (minimum
guaranteed) and
Rs. 21.00 lac
(maximum achievable)
as per policy
of the Company.
Ms. Savitri Devi Singh shall be entitled like any other
employee annual increments / increase as per policy of
the Company.
Ms. Savitri Devi Singh, being related to Dr. K.P. Singh
and Mr. Rajiv Singh, approval of the Members is being
sought by way of Special Resolution for the above
increase pursuant to the provisions of Section 314(1) of
the Companies Act, 1956.
None of the Directors of the Company, except
Dr. K.P. Singh and Mr. Rajiv Singh, being her relatives,
are interested or concerned in the passing of the said
resolution.
The Board of Directors of your Company recommends
the resolution for approval.
By Order of the Board
For DLF Limited
Subhash Setia
Company Secretary
The Ministry of Corporate Affairs, Government of India, vide its letter No. 47/527/2009-CL-III dated 24th
August, 2009 has granted exemption u/s
212(8) of the Companies Act, 1956 from attaching the Balance Sheet, Profit & Loss Account and other documents of the subsidiary companies
with the Balance Sheet of the Company. The annual accounts of the subsidiary companies and the related detailed information will be made
available upon request by the investors of the Company and of its subsidiary companies. These documents will be available for inspection by any
investors at the Registered/Head Office of the Company and that of subsidiary companies concerned.
Registered Office
Shopping Mall, 3rd Floor
Arjun Marg, Phase-I, DLF City
Gurgaon (Haryana) – 122 002
27th
August, 2009
New Delhi
13. 11
*Only Audit and Shareholders’/Investors’ Grievance Committees included.
Details of Directors seeking Re-appointment at the Annual General Meeting
(In pursuance of Clause 49 of the Listing Agreement)
Name of Director Mr. K. Swarup Dr. D.V. Kapur Mr. M.M. Sabharwal
Date of Birth
Age
8th
August, 1940
69 yrs.
9th
September, 1928
81 yrs.
21st
August, 1922
87 yrs.
Date of Appointment 1st
January, 2006 21st
April, 2006 21st
April, 2006
Qualifications Post Graduate in Commerce & Law;
Fellow Member of the Institute of
Company Secretaries of India.
Electrical Engineering (Hons.), D.Sc. B.A. (Economics)
Expertise in specific
functional areas
Currently heading Legal Affairs of the
Company for more than 11 years.
Has over 46 years of management
experience in a number of corporate
positions.
Dr. Kapur had an illustrious career in the
Government sector with a successful track
record of building vibrant organisations and
successful project implementation. He served
Bharat Heavy Electricals Limited (BHEL) in
various positions with distinction, but his most
remarkable achievement was establishment
of a fast growing systems oriented National
Thermal Power Corporation (NTPC) of which
he was the founder Chairman-cum-Managing
Director. For the contribution to success and
leadership of the fledgling organisation, he
was described as ‘Model Manager’ by the
Board of Executive Directors of World Bank.
Dr. Kapur served as Secretary to the
Government of India in the Ministries of
Power, Heavy Industry and Chemicals &
Petrochemicals during 1980-86. He was
also associated with a number of national
institutions as Member, Atomic Energy
Commission; Member, Advisory Committee
of the Cabinet for Science and Technology;
Chairman, Board of Governors, IIT Bombay;
Member, Board of Governors, IIM Lucknow
and Chairman, National Productivity Council.
In recognition of his services and significant
contributions in the field of Technology, Manage-
ment and Industrial Development, Jawaharlal
Nehru Technological University, Hyderabad
conferred on him the degree of D. Sc.
Mr. M.M. Sabharwal has held various
corporate positions including those of
Chairman of Dunlop India Ltd., Bata
India Ltd, Britannia Biscuit Co. Ltd.,
Indian Oxygen Ltd., Needle Industries
India (Pvt.) Ltd., Precision Electronics
Ltd.; Director of Oil India Ltd, National
Aluminium Company Ltd., Fibre Glass
Pilkington Ltd., Avery India Ltd. and
Ranbaxy Laboratories Ltd.
In addition, he is the Director of Nutrition
Foundation of India and was President
of PHD Chamber of Commerce and
Industry, New Delhi, Director, Institute of
Management, Kolkata and Dy. Chairman
of International Management Institute,
New Delhi.
In recognition of his meritorious social
services, Govt. of India has conferred
‘Padma Shri Award’ on him. He has also
been conferred with:
-Honorary ‘OBE’ in 1998 by the
Government of U.K. for his role in
promoting Indo-British partnership in
Social Welfare;
-‘Life Time Achievement Award’ for
outstanding contribution towards the
cause of elderly;
-‘The Chirayushya Samman Award’ by
the Union Minister for Social Justice &
Empowerment, Govt. of India for being a
pioneer in building ‘Helpage India’.
Directorships held in
other companies
DLF Commercial Developers Ltd.
DLF Estate Developers Ltd.
DLF Home Developers Ltd.
DLF Land Ltd.
DLF Retail Developers Ltd.
DLF Wind Power Pvt. Ltd.
Shivajimarg Properties Ltd.
Drivetech Accessories Ltd.
GKN Driveline (India) Ltd.
Honda Siel Power Products Ltd.
Reliance Industries Ltd.
Zenith Birla (India) Ltd.
Nil
Committee positions* in
DLF Limited
Shareholders’/Investors’ Grievance
Committee -Member
Shareholders’/Investors’ Grievance
Committee - Chairman
Audit Committee - Member
Audit Committee - Member
Committee positions* in
other public companies
Audit Committee
DLF Retail Developers Ltd. -Member
Audit Committee
Honda Siel Power Products Ltd. – Chairman
GKN Driveline (India) Ltd. – Chairman
Zenith Birla (India) Ltd. – Member
Shareholders’/Investors’ Grievance
Committee
Honda Siel Power Products Ltd. – Chairman
Nil
Relationships between
Directors inter-se
Nil Nil Nil
Number of Shares held 9,150 10,000 5,500
15. 13
Directors’ Report
Your Directors have pleasure in presenting their
44th
Annual Report on the business and operations
of the Company together with the audited results
for the financial year ended 31st
March, 2009.
Financial Results
(Rs. in Crores)
Consolidated
2008-09 2007-08
Gross operating Profit 5,985.98 9,961.48
Less : Finance Charges 554.84 310.00
Less: Depreciation 238.96 90.06
Profit before Tax 5,192.18 9,561.42
Less: Provision for Tax 675.36 1,739.09
Profit before minority interest 4,516.83 7,822.34
Share of Profit/(loss) in associates (21.10) 26.41
Minority interest (27.54) (35.48)
Profit after tax and minority interest 4,468.19 7,813.27
The year under review was extremely challenging.
The markets witnessed unprecedented turbulence
in the wake of the global financial meltdown.
A runaway inflation touching a high point of 12%
early in the year, tight monetary policies followed
by the authorities for most of the year to control
inflation with the consequent high interest rates,
precipitous 26% fall in the value of the Rupee
during the year and weak consumer demand, all
led to a difficult environment in which the
Company had to operate.
The worst affected industry was Real Estate. The
Company being the forerunner had to face the
brunt of the economic slow-down resulting into
decreased sales volumes and pressure on the
profit margins and financing costs.
The Company’s total income on consolidated basis
decreased from Rs. 14,684 Crores to Rs. 10,431
Crores, a decrease of 29% over the previous
financial year. Similarly, the gross operating
profit on consolidated basis reduced from
Rs. 9,961 Crores to Rs. 5,986 Crores, resulting in
a decrease of 40% and the net profit after tax and
minority interest for the year is Rs. 4,468 Crores
as against Rs. 7,813 Crores for the previous year
(2007-08), representing a decrease of about
43%. This revenue and profit figures have been
arrived at after adjusting for losses contributed by
non-core businesses of Rs. 163 Crores.
DLF has taken aggressive steps to meet the
challenges of the difficult times through major
initiatives in sustaining growth, cost-optimization,
process improvement and efficient management
of working capital. The commitment to meet
these challenges resulted in an optimistic start
to FY 2009-10.
Review of Operations
Over the past few years, the real estate sector
has transformed from a nascent and unorganized
sector to a professionally organised industry, which
has been contributing significantly to the nations’
GDP. Being the leader in the industry in terms
of revenues, earnings and market capitalisation,
your Company has been able to capitalise the
opportunities in an efficient manner.
However, the challenging credit market conditions
through out the calendar year 2008, triggered off
a slowdown in the second half of FY09, resulting
in a slowdown in sales and fresh bookings. While
your Company saw relatively subdued volumes of
sales and leases through the last 2-3 quarters of
FY09, things have now started looking up with a lot
of steps being taken by the Government as well as
the players in the industry.
During the year under report, your Company
delivered7m.s.f.ofdevelopedareatoitscustomers
– 2 m.s.f. of homes and 5 m.s.f. of office space.
As on 31st
March, 2009, your Company had a
development potential of 425 m.s.f., with 37 m.s.f.
of projects under construction.
Focussed on timely execution of delivery of pre-
sold/leased projects, your Company slowed down
few projects till conditions stabilize to improve
demand for fresh leasing. Accordingly, 27 m.s.f. of
office and retail developments have been deferred.
Your Company has also exited from long gestation
projects like Bidadi and Dankuni townships, along
with development plan for hotels being shifted out
for next 15-18 months.
Your Company has also been granted in
principle approval by the Central Government for
de-notification of 5 of its SEZs.
16. 14
Your Company introduced price re-sets and
extended other benefits to its customers in Feb-
March, 2009. This was done in an endeavour to
pass on the benefits of reduced construction costs
and offer best possible prices to our customers,
as well as build on the Company’s brand equity
as a customer-friendly Company. Your Company
foresees the results of these measures in terms
of increased customer support and recognition as
the preferred and ‘fair’ developer by the customers
in the coming time.
During the year, DLF Pramerica Life Insurance
Company Limited, your Company’s JV with
Prudential International Inc. for life insurance
services in India, began its operations. DLF
Pramerica Asset Managers Pvt. Ltd, a JV between
your Company and Prudential Financial Inc., also
received in-principle approval during the year for
commencing its business operations in India.
Your Company met all its stakeholder commitments
in time during the year, including its commitments
to banks and financial institutions.
In order to weather the tough economic
environment over the last year, your Company
affected a strategy which allowed it to be liquid,
whilst it tested the right market conditions where
it could attract significantly larger number of end
customers. Value proposition being a key element
of this strategy, your Company launched various
different projects across India in the residential
space and demonstrated leadership position within
the industry to bring back demand.
1,389 apartments were booked in a single day in
the newly launched project in the heart of Delhi
during April, 2009. Even in Bangalore, around 700
apartments were booked in Q1 FY2010.
Though there were marginal cancellations in
some of the existing pre-leased space across the
country, your Company’s relationship with all the
long term strategic tenants continues to be strong
and engaged. Your Company believes that as
business conditions in the global markets improve
over the next 6 months, the leasing activity will
gain fresh traction.
On the whole, while fiscal 2009 was hit by the tight
credit conditions, subdued volumes and few one-
time adjustments, your Company sees the coming
quarters gaining back the lost momentum and
showing better performance. The first quarter of
FY10 has already started showing positive signs
with 2.5 m.s.f. sold in homes segment in April,
2009. Seeing these positive trends, your Company
will continue to launch new residential and
commercial projects in various locations across
the country, after adequate research of market
demand, at the best prices.
The performance of the Company on stand-alone
basis for the year ended on 31st
March, 2009 is
as under:
(Rs. in Crores)
Stand Alone
2008-09 2007-08
Turnover 3,839.04 6,058.46
Gross operating Profit 2,734.80 3,591.25
Less : Finance Charges 809.86 447.65
Less: Depreciation 114.08 25.68
Profit before Tax 1,810.86 3,117.92
Less: Provision for Tax 261.00 543.52
Profit after Tax 1,549.86 2,574.40
Earlier Year Items
Income Tax - 0.19
Prior-period expenses (net) 2.09 -
Net Profit 1,547.77 2,574.59
Balance as per last Balance Sheet 1,734.96 269.27
Balance Available for
Appropriation
3,282.73 2,843.86
Appropriation
Transfer to Debenture
Redemption Reserve
113.17 -
Utilise for Bonus Issue - 0.07
Transfer to General Reserve 154.78 311.00
Dividend on Equity Shares
340.97Interim -
Final 339.44# 340.97
Tax on Dividend 28.91 115.89
Excess provision of previous
year written back
(29.81) -
Surplus carried to Balance Sheet 2,676.24 1,734.96
3,282.73 2,843.86
#
Proposed
17. 15
Future Outlook
Given the prevalent sentiments, your Company
had followed a cautious approach to new launches.
However, as economic conditions stabilize, your
Company plans to make selective new launches
based on targeted market research in different
markets to catch the changing demand scenario.
Your Company will continue to focus on affordable
housing with test launches across newer locations,
along with launching some strategic “city-center”
housing projects. We endeavour to generate buyer
interest by providing excellent location and superior
product specifications.
Focussing on the sales model, your Company
will also make selective launches of commercial
complexes.
For offices, we intend to expedite execution and
deliveries wherever backlog exists and pump up
the construction activity based on visibility of pre-
leasing.Wecontinuetostrengthenourrelationships
with our existing customers.
Your Company is quite hopeful that the coming
quarters will see better sales/leases and the
performance of the Company will be revived.
Dividend
In view of the difficult economic climate in which the
Company operated during the year, a reduction is
being made in the proposed Dividend as compared
to the Dividend of Rs.4 per Equity Share (200%)
paidinthepreviousyear.YourDirectorsarepleased
to recommend for approval of the Members a
Dividend of Rs.2 per Equity Share (100%) of Rs. 2
each for the FY 2008-09 amounting to Rs. 368.35
Crores (Rs. 339.44 Crores towards Dividend and
Rs. 28.91 Crores as Dividend tax).
Buy-Back of Equity Shares
The Board of your Company in its meeting held on
10th
July, 2008 approved buy-back of not exceeding
2.20 Crores fully paid-up Equity Shares of Rs.2
each, at a price not exceeding Rs.600 per Equity
Share, by utilizing an amount of not exceeding
Rs.1,100 Crores, i.e., within the limits of 9.80% of
the aggregate of the Company’s total paid-up Equity
Capital and Free Reserves as on 31st
March, 2008,
from open market through NSE and BSE using
their nation-wide electronic trading facilities in
compliance with the provisions of the Companies
Act, 1956 read with Securities and Exchange Board
of India (Buy-Back of Securities) Regulations,
1998. Accordingly, Public Announcement (PA)
and Corrigendum to PA dated 30th
September and
15th
October, 2008 respectively, were issued by
the Company.
The Buy-back Offer was open from 17th
October,
2008 to 6th
May, 2009. During the period the
Company bought-back 76,38,567 Equity Shares,
for a total consideration (including transaction
cost) of Rs.141.02 Crores, i.e. at an average
price of Rs.184.62 per share by utilising free
reserves and/or share premium account of the
Company. The paid-up capital of the Company
after extinguishment of shares bought back under
the Scheme stood at Rs.339.43 Crores.
Fixed Deposits
The Company has not accepted/renewed any
public deposits during the year under review. An
unclaimed public deposit of Rs.0.27 lacs was
transferred to Investors Education and Protection
Fund (IEPF) on 19th
June, 2008.
Subsidiary Companies and Consoli-
dated Financial Statements
The consolidated financial statements of the
Company and its subsidiaries, prepared in
accordance with Accounting Standards AS-21,
23 and 27, issued by the Institute of Chartered
Accountants of India, form part of the Annual
Report. The Company has made an application to
the Central Government seeking exemption under
Section 212(8) of the Companies Act, 1956 from
attaching the Balance Sheet, Profit & Loss account
and other documents of the subsidiaries to the
Balance Sheet of the Company. The documents/
details will be made available upon request to any
member of the Company and are also available
for inspection by any Member of the Company/
its subsidiaries at the Registered Office of the
Company/its subsidiaries and at the Head Office
of the Company during working hours up to the
date of Annual General Meeting.
18. 16
Conservation of Energy, Technology
Absorption and Foreign Exchange
Earnings / Outgo, etc.
The particulars required to be disclosed under
Section 217(1)(e) of the Companies Act, 1956
read with Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988 are
given at Annexure-A annexed hereto and form
part of this Report.
Particulars of Employees
In terms of the provisions of Section 217(2A) of the
Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules, 1975, the
names and other particulars of the employees are
set out in the annexure to the Directors’ Report.
However, as per the provisions of Section 219(1)
(b)(iv) of the said Act, the Directors’ Report and
the Accounts are being sent to all the Members of
the Company and others entitled thereto excluding
the statement of particulars of employees.
Any member interested in obtaining such
particulars may write to the Company Secretary
at the Registered Office of the Company.
Employee Stock Option Scheme
(ESOS)
Information in terms of Clause 12 of the SEBI
(Employees’StockOptionSchemeandEmployees’
Stock Purchase Scheme) Guidelines, 1999 is at
Annexure-B.
Debentures
During the year under review, the Company has
issued Non-convertible Debentures (NCDs) of
Rs.10 lacs each on private placement basis
aggregating to Rs.1,320 Crores, as per details
below:
14% NCDs aggregating to Rs.100 Crores toi)
Standard Chartered Bank;
13.7% NCDs aggregating to Rs.500 Crores toii)
Life Insurance Corporation of India;
14% NCDs aggregating to Rs.720 Crores toiii)
Life Insurance Corporation of India.
Listing at Stock Exchanges
The Equity Shares of your Company continue to
be listed on BSE and the NSE. During the year
under review, the Equity Shares form part of S&P
CNX Nifty & BSE - 30 indices. The Non-convertible
Debentures issued by your Company are also listed
in the Wholesale Debt Market (WDM) segment of
National Stock Exchange. The listing and custody
fees for the year 2009-10 have been paid to the
Stock Exchanges, NSDL and CDSL, respectively.
Pursuant to Clause 5A of the Listing Agreement,
the Company has initiated appropriate steps to
deal with unclaimed Equity Shares allotted in the
IPO in 2007. As on 31st
March, 2009, 14,750 Equity
Shares are unclaimed by the rightful owners.
Forfeiture of Partly-paid Shares
TheBoardofDirectorsoftheCompanyinitsmeeting
held on 30th
July, 2009 has forfeited 43,680 partly-
paid Equity Shares (allotted on 28th June, 2007)
for non-payment of balance outstanding amount/
allotment money due and payable thereon.
Management Discussion and Analysis Report
The Management Discussion and Analysis
Report as required under Clause 49 of the Listing
Agreement with the Stock Exchanges forms part
of this Report.
Corporate Governance Report
The Company is committed to maintain the
highest standards of Corporate Governance.
The Directors adhere to the requirements set
out by the Securities and Exchange Board of
India’s Corporate Governance practices and have
implemented all the stipulations prescribed. The
Company has implemented several best Corporate
Governance practices as prevalent globally. The
Report on Corporate Governance as stipulated
under Clause 49 of the Listing Agreement forms
part of this Report.
Your Company was conferred ‘Golden Peacock
Award’ for Excellence in Corporate Governance in
September, 2008 at London.
The requisite Certificate from the StatutoryAuditors
of the Company, M/s. Walker, Chandiok & Co,
19. 17
Chartered Accountants, confirming compliance
with the conditions of Corporate Governance
as stipulated under the aforesaid Clause 49, is
attached to this Report.
Directors’ Responsibility Statement
As required under Section 217(2AA) of the
Companies Act, 1956, your Directors confirm
having:
a) followed in the preparation of the Annual
Accounts, the applicable accounting
standards with proper explanation relating to
material departures, if any;
b) selected such accounting policies and applied
them consistently and made judgments and
estimates that are reasonable and prudent
so as to give a true and fair view of the
state of affairs of your Company at the end
of the financial year and of the profit of your
Company for that period;
c) taken proper and sufficient care for the
maintenance of adequate accounting records
in accordance with the provisions of the
Companies Act, 1956 for safeguarding the
assets of your Company and for preventing
and detecting fraud and other irregularities;
and
d) prepared the Annual Accounts on a going
concern basis.
Auditors
The Auditors, M/s. Walker, Chandiok & Co,
Chartered Accountants, hold office until the
conclusion of the forthcoming Annual General
Meeting and are recommended for re-appointment.
Certificate from the Auditors has been received
to the effect that their re-appointment, if made,
would be within the limits prescribed under Section
224(1B) of the Companies Act, 1956.
Auditors’ Report
There is no qualification or adverse remarks on the
stand-alone financials of the Company. Further, the
observation given in Point No. 4 of the Auditors’
Report on consolidated financials read with
Note No. 19 of Schedule 24 to the consolidated
financials, are self-explanatory and your Directors
have nothing more to add.
Directors
Pursuant to Section 256 of the Companies Act,
1956 read with the Clause 102 of Articles of
Association of the Company, Dr. D.V. Kapur,
Mr. M.M. Sabharwal and Mr. K. Swarup, Directors
retire by rotation at the ensuing Annual General
Meeting and being eligible have offered themselves
for re-appointment.
Brief resume of the Directors proposed to be re-
appointed, nature of their experience in specific
functional areas, names of the companies in
which they hold directorship and membership/
chairmanship of Board Committees, shareholding
and relationship between Directors inter-se, as
stipulated under Clause 49 of the ListingAgreement
with the Stock Exchanges, are provided in the
Notice for convening the Annual General Meeting.
Corporate Social Responsibility
The Company has made significant investments
in community welfare initiatives including to under-
privileged through education, training, health,
environment, capacity building and rural-centric
interventions as detailed at Annexure - C. The
employees of the Company also participated in
many of such initiatives.
Promotion of Sports
DLF-Indian Premier League (IPL), in its second
season held at South Africa, saw a strong re-
affirmation of the Company’s commitment towards
sporting events, while it also strengthened DLF’s
national as well as international brand equity. Your
Company bagged the title sponsorship rights for
IPL in 2008 for a total of five years.
DLF Golf & Country Club retained its crown as the
‘Best Golf Course in India’ for a second year in
succession, presented at the Asian Golf Monthly
Awards Ceremony held in Shenzhen, China
Awards and Accreditations
During the period under review, your Company
has excelled in various spheres of Corporate
achievements and is recognised through public
evaluation. The details of awards and recognitions
to your Company are as under:
20. 18
• Dr K.P. Singh, Chairman has been invited on
the Board of Governors on the Future of Real
Estate at the World Economic Forum and
participated as a Discussion Leader at the
Annual Meet of the Forum held at Davos on
28th
January, 2009.
• Public Relations Society of India
(PSRI) presented the PSRI Golden Jubilee
Award to DLF for ‘Best Private Sector
Organisation’
• The Reader’s Digest ‘Most Trusted Brand
2009’ Award was picked up by DLF for the
second year in a row.
• AugticsSystems(InternationalRealEstateData
Bank) ‘Award of Excellence’ bestowed three
individual awards to DLF Aralias, The Belaire
and The Magnolias.
• GIREM conferred DLF with the ‘Company of the
Year’ Award and DLF Emporio with the ‘Iconic
Project 2008’Award at the Urban Planning and
Real Estate Leadership Summit, 2008.
• Realty Plus Excellence Award 2009 for
the category ‘Luxury Project of the Year’ was
presented to DLF Aralias.
• Realty Plus ‘Lifetime Achiever’s Excellence
Award 2009’was bestowed upon Dr. K.P. Singh,
DLF Chairman, for his outstanding contribution
to the Indian Real Estate Sector.
• Conferred ‘Golden Peacock Award for
Excellence in Corporate Governance’ for the
year 2008 at London.
Credit Rating
During the year under review, ICRA Limited, an
associate of Moody’s Investor Service and a leading
credit rating agency, assigned ‘A2+’ for Company’s
short term Debt programme of Rs.3,000 Crores.
Further, CRISIL, a unit of Standard & Poor’s,
assigned ‘A+ ’ / Rating “watch with developing
implications” to the Company’s Rs. 92.90 billion
Term Loans and Overdraft Facility and “P1” /
Rating “watch with developing implications” to the
Company’s Rs.15.99 billion Short Term Loan, Bank
Guarantee and Letter of Credit.
Wind Power Business
In order to concentrate and consolidate on its
core business, your Company, on 1st
July, 2009,
transferred its Wind Power business to its wholly
owned subsidiary, DLF Wind Power Private Limited,
on slump sale basis pursuant to the approval granted
by the Shareholders through postal ballot.
Acknowledgements
Your Directors wish to place on record their sincere
appreciation to the employees at all levels for
their hard work, dedication and commitment. The
enthusiasm and unstinting efforts of the employees
have enabled the Company to remain at the
forefront of the industry despite slow-down in the
Real-Estate Industry.
Your Company continues to occupy a place
of respect amongst stakeholders, most of all
our valuable customers. Your Directors would
like to express their sincere appreciation for
assistance and co-operation received from the
vendors and stakeholders including Financial
Institutions, Banks, Central & State Government
authorities, other business associates, who have
extended their valuable sustained support and
encouragement during the year under review.
It will be the Company’s endeavour to build
and nurture strong links with industry based on
mutual respect and consistent co-operation
aligned with customer interests.
for and on behalf of the Board of Directors
(Dr. K.P. Singh)
Chairman
New Delhi
30th
July, 2009
21. 19
ANNEXURE - A
Disclosure of particulars under Section 217(1)(e) of the Companies Act, 1956, read
with the Companies (Disclosure of particulars in the Report of Board of Directors)
Rules, 1988, are given as under:
A Conservation of Energy
a) Energy conservation measures taken i) Use of wind energy for power generation 228 MW of capacity has been
installed.
ii) Energy conservation done by installing co-generation plants using gas
based power generators and Vapour Absorption Machines (VAMs) in four
projects which have already been commissioned.
For another seven projects procurement/installation of generators &
VAMs is in progress.
iii) Energy saved by using exhaust gas and water in VAMs approx. 11 lakh
units per month in four plants.
b) Additional investments and proposals, if
any, being implemented for reduction of
consumption of energy
Additional investment is being planned to install further co-generation plants.
Use of solar energy for common area lighting is being practised.
c) Impact of the measures at (a) and (b) above
for reduction of energy consumption and
consequent impact on the cost of production
of goods
Electrical energy to the tune of approx. 11 lakh units per month is being
saved.
d) Total energy consumption and energy per unit
of production
NA
B. Technology Absorption
e) Efforts made in technology absorption NA
C. Foreign Exchange Earnings and Outgo:
f) i) Activities relating to exports The Company is engaged in developing /constructing residential and
commercial properties in India and selling the immovable properties to
customers in India and abroad.
ii) Initiatives taken to increase exports The Company does not have any export activities.
iii) Development of new export markets for
products and services
The Company receives remittances of sale consideration for immovable
properties located in India, purchased by the customers’ abroad.
iv) Export Plans The Company has taken many initiatives to increase the sale of immovable
properties to the customers abroad by designing premium apartments in
accordance with the requirements and lifestyle of NRIs, by holding meetings
with customers at different locations abroad, attending exhibitions, fairs etc.
through its senior executives and Directors with a view to have personal
contact with customers, by giving advertisement in India and abroad, by
having continuous touch with enquiries from customers abroad through the
Company’s liaison office in London.
g) Total Foreign Exchange earned and used: (Rs. In Crores)
2008-09 2007-08
a) Foreign Exchange earned 99.28 70.70
b) Foreign Exchange used 62.90 120.30
22. 20
FORM – A
Form for Disclosure of Particulars with respect to Conservation of Energy
A. Power and Fuel Consumption
1.
Electricity
a)
Purchased Current Year Previous Year
Unit 37,421,772 48,166,505
Total Amount (in Rs.) 178,127,635 219,157,596
Rate per Unit 4.76 4.55
b)
Own Generation
i)
Through diesel generation
Unit 109,431,014 59,596,491
Unit per litre of diesel oil 3.82 3.82
Cost/Unit (in Rs.) 9.81 9.16
ii)
Through gas turbine/generator
Unit 40,503,954 30,231,250
Unit per litre of fuel oil/gas 3.70 3.70
Cost/Unit (in Rs.) 3.51 3.40
2.
Coal (Specify quantity and where used)
Quantity (tonnes) NA NA
Total Cost (in Rs.) NA NA
Average Rate NA NA
3.
Furnace Oil
Quantity (K. Litres) NA NA
Total Amount (in Rs.) NA NA
Average Rate NA NA
4. Others/internal generation through wind energy
Quantity (Units) 364,785,013 28,563,397
Total Cost (in Rs.) 113,083,354 8,854,653
Rate/Unit (in Rs.) 0.31 0.31
B. Consumption per unit of Production
Standards, (if any) Current Year Previous Year
Products (with details) unit - NA NA
Electricity - NA NA
Furnace Oil - NA NA
Coal (Specify quality) - NA NA
Others (specify) - NA NA
23. 21
FORM - B
Form for disclosure of Particulars with respect to Absorption
Research and Development (R&D)
1. Specific areas in which R & D carried out by the Company
Company has initiated first of its kind building cogeneration
activities. The waste heat of the flue gases is used in absorption
chillers. Efforts are being made with the help of USAID and TERI
for building energy simulation.
2. Benefits derived as a result of the above R & D
6.7 Million Units of energy saved through waste heat based
absorption chillers used for building air-conditioning.
3. Future plan of action
Exploring the possibility of use of the building integrated Solar
PV power in future commercial & retail projects.
4. Expenditure on R & D Nil
Capitala.
Recurringb.
Totalc.
5. Total R&D expenditure as a percentage of total turnover Nil
Technology Absorption, Adaptation and Innovation
1.
Efforts in brief, made towards technology absorption,
adaptation and innovation
Effortsaremadeforadoptingthebuildingcogenerationtechnology
in a combination of residential and commercial projects.
2. Benefits derived as a result of the above efforts
Approx. 60% water saving on account of air conditioning by
using adiabatic cooler and approx.23% electrical energy saving
by using VAMs and Solar cells.
3.
In case of imported technology (imported during the last 5
years reckoned from the beginning of the financial year)
following information may be furnished
Technology importeda)
Year of importb)
Has technology been fully absorbedc)
If not fully absorbed, areas where this has not taken place,d)
reasons therefore and future plan of action.
NA
24. 22
ANNEXURE - B
Statement pursuant to Clause 12 ‘Disclosure in the Directors’ Report of SEBI (Employees’ Stock
Option Scheme and Employees’ Stock Purchase Scheme) Guidelines, 1999.
2007 2008
Total Grants
made till
31.03.09
Future Grants
2009
(a) (i) Options granted 40,42,134 18,05,579 58,47,713 Min - 3,81,559
Max - 16,46,959
(b) Pricing formula Intrinsic Value
(c) Options vested Nil
(d) Options exercised Nil
(e) Total number of equity shares arising as a result of exercise
of options
58,47,713
(f) Options forfeited / lapsed 6,99,937
(g) Variation of terms of options Nil
(h) Money realized by exercise of options Nil
(i) Total number of options in force at the end of the year 51,47,776
(j) Employee wise detail of options granted during the financial
year 2008-09 :
(i) Senior Managerial Personnel (Directors’ on Board)
Mr.T.C.Goyal, Managing Director
Total Options Granted till 31.03.2009 = 4,05,700
(ii) Any other employee receiving grant in any one year of
option amounting to 5% or more of the options granted during
the year
Nil
(iii) Identified employees who are granted options, during
any one year, equal to or exceeding 1% of the total issued
capital (excluding outstanding warrants and conversions) of
the Company at the time of grant.
Nil
(k) Diluted Earning Per Share (EPS) pursuant to issue of
shares on exercise of option calculated in accordance with
Accounting Standard (AS – 20- Earnings Per Share)
Rs. 9.09
(l) Where the Company has the employee compensation cost
using the intrinsic value of the stock options, the difference
between the employee compensation cost calculated using
intrinsic value of stock options and the employee compensation
cost recognized if the fair value of the options had been used
and the impact of this difference on profits and EPS of the
Company.
Difference in employee compensation cost:
Reduction Rs. 428.68 lac.
Impact on Profit :
Increase by Rs. 282.97 lac (net of Income Tax)
Impact on EPS:
Basic = + 0.03; Diluted = + 0.01
(m) Weighted average exercise price and weighted average
fair value of options whose exercise price equals or exceeds
or is less than market price of the stock.
Rs.2
Weighted average fair value for options granted on 1st
July, 2008 :
Rs.380.83
Weighted average fair value for options granted on 10th
October, 2008 :
Rs.293.26
(n) Description of method and significant assumptions used
during the year to estimate fair value of options.
Weighted average information for options granted on 1st
July 2008 :
(i) Risk free interest rate :9.46%
(ii) Expected life (in years) : 6.5
(iii) Expected volatility :52.12%
(iv) Expected dividend yield :0.57%
(v) Price of the underlying share in the market at the time of option grant :
Rs.396.40
Weighted average information for options granted on 10th
October, 2008 :
Risk free interest rate : 8.17%(i)
(ii) Expected life (in years) : 6.5
(iii) Expected volatility : 59.60%
(iv) Expected dividend yield : 0.73%
(v) Price of the underlying share in the market at the time of option grant :
Rs.308.85
25. 23
Corporate Social Responsibility
DLF Foundation - An initiative
Thisyear,yourCompanyembarkedonanambitious
mission towards fulfilling its social commitments
by establishing DLF Foundation. Under the direct
patronage of Dr. K.P. Singh, Chairman, DLF
Limited, the DLF Foundation has been formed
with the mission of empowering communities by
creating opportunities for the underprivileged and
providing platforms for promoting inclusive growth
which is environmentally friendly, sustainable
and socially uplifting. The overall aim is to foster
significant improvements in areas of education,
training, health and environment.
Education
• DLF Rural Learning Excellence Centres.
The DLF-Pratham Learning Enhancement
Programme covering 25 government schools
in over 22 villages of Gurgaon continues
to enable underprivileged children from
the rural community to enhance quality
of learning in English, Mathematics and
Hindi. The Programme has been extended
to cover Advanced English learning and
establishment of rural libraries. The English
learning module which started with 40
teachers in November,2008 aims at improving
English conversation and reading skills of
the Government Primary school students.
These students coming from marginalised
backgroundsarenowlearningtocommunicate
in English and the programme has been
extremely well received by the beneficiaries.
• Swapan Sarthak School. DLF is running a
non formal school for over 200 underprivileged
children with no access to formal education
wherein all facilities including fees, uniforms,
books and mid day meals are being
provided. Out of these, 30 students are being
mainstreamed in formal schools under a
scholarship scheme where all their education
expenses will be borne by the Foundation.
Seeing the success of this programme, plans
are afoot to open a number of additional
schools in the current financial year.
• SBM Senior Secondary School. Your
Company is running a CBSE affiliated SBM
Senior Secondary School in Delhi. The school
has on its rolls 780 students coming from
low income group families and a number of
academic and administrative reforms have
been undertaken to improve the functioning
of the school. This year performance of
students in the Board exams of standard 10th
and 12th
has been very encouraging wherein
a large number of students have achieved
distinctions. DLF is also constructing a state-
of-the-art and modern school premises with a
completely new look at its own cost.
• DLF Summerfields School. DLF is running
a CBSE affiliated 10+2 Summerfields
School, Gurgaon for the urban and rural
communities. There are 1800 students
studying in this school.
Health
• Rural Primary Health Centres. DLF has
established a rural health care programme
under which the Company has set up a
number of Rural Primary Health Centres in
Haryana. Each Centre is catering to a village
cluster for providing preventive and curative
health services to the under-privileged and
rural population. Equipped with medical
consultancy, diagnostic facilities and medicine
dispensation, these Centres promote
community health awareness and free health
care for the rural needy. Specialists are
available at the Centres during clinic hours
and partnerships have been established
with leading hospital brands in Gurgaon for
evacuation and treatment of patients for
secondary and tertiary care. The Company
is taking definitive steps for starting mobile
clinics based on mobile vans to extend our
reach into new villages where primary health
services are scanty.
• Eye Care camps. A number of eye camps
have been organised in rural areas around
Gurgaon in association with Arunodya Eye
Centre. In these Camps eye care diagnostics
and surgical care were provided.
• Blood donation camp. A blood Donation
ANNEXURE - C
26. 24
Camp was organised by Lioness Club
Sukarma, Gurgaon and at Delhi. There
was a very enthusiastic response from DLF
employees who donated blood in large
numbers.
Mid-Day Meals for the disabled
DLF has partnered the Delhi Government’s
“Hunger Free Delhi Campaign – Aapki Rasoi”
for providing daily free meals at a disabled
workers site at the India Gate Lawns in
New Delhi.
Labour Welfare
• Housing for Construction Workers.
Recognising the need to provide basic
housing for the construction workers
employed in various DLF projects, DLF has
built a number of labour camps equipped with
modern facilities. During the financial year,
your Company has established a new modern
housing complex for construction workers in
Kherki Daula, Gurgaon. This complex caters
to the housing, education and health needs
of about 5,000 construction workers and their
families.
• ConstructionTrainingCentre.Aconstruction
training centre has been established for
training potential supervisory level staff. This
centre imparts training in various construction
disciplines and is fully residential. This aims
to bring more professionalism in construction
activities.
Vocational Training Centres
DLF Vocational Training Centres operating
with the philosophy of end-to-end livelihood
solutions have trained and placed 1500
trainees in their respective work fields so far.
These training centres were established to
train unemployed youth from underprivileged
backgrounds with the objective to empower
them with permanent skills thereby enabling
them to earn their livelihoods. More such
vocational centres are planned to be
established in partnership with other reputed
organisations in this field.
Community Outreach and Integrated
Rural Development
Community outreach activities were taken
up pro-actively across all DLF locations.
Development activities were undertaken in
association with NGOs, Panchayats and local
communities in the areas of:-
a) Medical care through organizing
awareness and health camps;
b) Introduction of modern education tools;
c) Enhancement of education standards
by enlisting credible professional
organisations;
d) Renovation of village schools and up-
gradation of rural infrastructure; and
e) Construction of rural roads.
Environment
For holistic urban and rural development, DLF
has paid special attention to environmental
improvements. The emphasis here is to give
back as much if not more as is being taken
during the rigorous development process.
The Group’s futuristic outlook encompasses a
strong commitment towards the environment.
The landscaping and greening of the area
around the development projects is indicative
of our endeavours in this regard. A total of
over 1.2 lakh trees have been planted by
DLF over a period of time, in Gurgaon. Out
of this 30,000 trees have been planted and
maintained during the present financial year
itself. HUDA has consistently over the last
seven years awarded DLF with “Excellence
in Horticulture Preservation” award.
Promoting Green Building Technologies
As a leading real estate Company in the
country, DLF is committed to adopt environ-
ment friendly practices in our buildings.
• The Company has installed gas co-generation
technology in commercial buildings leading
to significant reduction in carbon emissions
and recycling waste heat for air-conditioning
of these buildings resulting in considerable
energy savings. This initiative was recognised
with the CII conferring the “CII National
27. 25
Award for Excellence in Energy Management
- 2008” to DLF.
• A pilot project has been undertaken in
creation of energy efficient buildings. The
project has been initiated in Gandhinagar.
The demonstration project will for the first
time enable comparison between an energy
efficient building and a similar conventional
building, both constructed adjacent to each
other. This initiative is being undertaken in
association with US AID.
• DLF is constructing green buildings in
Hyderabad under certification by IGBC (Indian
Green Building Council).
• DLF undertook an initiative with TERI in
existingDLFBuildingstore-engineerbuildings
for reducing energy consumption.
• DLF is a founder member of the Indian Green
Building Congress (IGBC).
In addition to the above, the following green
initiatives are being undertaken in all DLF
projects:-
• Recycling of waste water.
• Rainwater harvesting.
• Production of chilled water by Vapour
Absorption Method thus eliminating use of
ozone depleting refrigerants.
• Use of high performance reflective glass in
buildings.
• Pollutioncontrolmeasuresduringconstruction
activity at project sites.
• Use of green materials like fly ash in
construction
• Heat insulation roof treatment.
Award of Carbon Credits
DLF’s 150 MW wind power project at Gujarat
has been registered on 18th
June 2009
for carbon credits at the United Nations
Framework Convention for Climate Change
(UNFCCC). This will generate about 3,00,000
carbon credits annually. This brings DLF in
the league of the select companies in the
country to have obtained carbon credits for
their projects. A number of other proposals
for carbon credits are in the pipeline.
Improvement of Urban Infrastructure
DLF is committed to sustaining and improving
the urban infrastructure in Gurgaon and has
undertaken the initiative of improving the road
network in the area to international standards
in partnership with HUDA. DLF under this
project is undertaking widening of HUDA
roads from National Highway 8 to Sector
55/56 in Gurgaon and improvements along
NH 8 from Delhi border to end of Gateway
Tower flyover. Under this project the road
network will include service roads, flyovers,
underpasses and bypasses to facilitate
smooth traffic movement in the area. This will
immensely benefit the local community.
Employee Participation
Employees form an important segment of
the Group and are an important stakeholder
in the business. The medical needs of our
own employees and their families are catered
for through an annual allowance and group
medical insurance. The Company has a
gratuity policy for its employees in place. The
low attrition rate in the Company is indicative
of their satisfaction and in general, the
employees are a happy lot.
Theemployeescontributedtowardsthefollowing
social causes during the year under review:
• Disaster Management – Fund-raiser for
the Bihar Flood Victims
• The disaster caused by floods in Bihar in 2008
had rendered many people homeless and
penniless.Inordertomakeasmallcontribution
towards the ongoing relief and rehabilitation
efforts, all employees of your Company
contributed their one day’s salary towards the
noble cause with the management extending
an equivalent amount. A total amount of
Rs. 40 lacs was donated to the Prime Minister
Relief Fund.
• Adoption of an informal school in Kolkata
DLF employees pooled in their resources
to assist in educating children coming from
rag pickers and slum families at the Tiljala
Society in Kolkata.
29. 27
Management Discussion & Analysis Report
I. INDIAN ECONOMY & THE REAL ESTATE
SECTOR
In recent years, India has been amongst the
fastest growing economies in the world. The
productivity growth rate of Indian economy is
estimated to be around 8% and it is expected
to sustain until 2020. Moreover, at this rate of
GDP growth, India is poised to become the
second largest economy in the world after
China. Further, the World Bank has ranked
India as one of the top economic reformers
worldwide in the last decade. India has
simplified business registration procedures,
cross-border trade and payment of taxes. It
has eased access to credit and strengthened
investor’s interest. Factors like rapid industrial
growth, Foreign Institutional Investments and
Foreign Direct Investments inflow, balance-
of-payments metrics, merchandise exports,
invisible accounts and foreign-exchange-
reserves have made a substantial contribution
towards the growth rate of Indian GDP.
After significant global growth witnessed over
almost a decade, the year of 2008-09 saw
some unforeseen events around the world.
Theglobalcreditmeltdownthatstartedwiththe
collapse of Lehman Brothers soon percolated
into the real economy. By the fourth quarter of
2008, every nation was experiencing effects
of the worldwide recession and corrective
actions were being initiated by governments
and central banks of all countries to tide over
the challenging times.
Inflation in India reached an all time high of
13% in August 2008 which triggered the RBI
to address the issue by raising the Cash
Reserve Ratio (CRR), Repo and Reverse
Repo Rates. As the cash crunch gained
prominence, affecting growth rate and end
user demand, fiscal stimuli were infused into
the economy for curbing inflation by the end
of the year (from 13% in mid-2008 inflation fell
to 5% by end-2008).
Despite the global slowdown, India is
expected to be the second fastest growing
economy in the Asia Pacific region. India’s
long-term growth story continues to remain
intact, against the backdrop of an increase in
FDI in FY08, which stood at USD 24 billion.
According to the Department of Industrial
Policy and Promotion (DIPP), the first quarter
of FY09 attracted USD 10 billion. A sizeable
portion of this FDI inflow went into the real
estate and housing sectors, with services
and infrastructure being the other recipient
sectors.
Cushman & Wakefield research estimates that
the pan-India cumulative demand projection
for the real estate sector across office,
residential, retail and hospitality is expected
to be approximately 1,098 m.s.f. by the year
2012. The residential segment will continue
to drive real estate demand in the country
accounting for nearly 63% of the total space
demand during the period 2008-12. While
the demand for commercial office space is
13
17
125
44
14
18
132
47
14
19
136
48
15
20
142
50
16
21
152
54
2008E
Commercial Residential Retail Hospitality
2009E 2010E 2011E 2012E
250
200
150
100
50
0
MillionSq.Ft.
Sources : Cushman & Wakefield Research
Demand Projection - Pan India
30. 28
expected to be 243 m.s.f. during this time
frame, the retail and hospitality segments are
expected to constitute 95 m.s.f. and 73 m.s.f.
of this total demand, respectively.
Residential
Rapid urbanization, increase in working age
population and decreasing household size
are some of the key growth drivers for the
residential space.
The rapid increase in capital values, rise in
mortgage rates and sustained poor sentiment
pertaining to employment scenario led to an
abrupt decline in housing demand in 2H/FY08.
However, despite the short term aberrations
there is still a clear latent housing demand in
the market at the right price.
Even after witnessing the high growth rate
in capital values, about 50% of locations
across major Indian cities remain affordable
given the income levels of the population.
These are mainly suburban locations that
are witnessing an onslaught of construction
activity in the office and retail sectors, thus
creating a demand for residential properties.
During Jan-Mar, 2009, some signs of
mortgage rate softening were seen wherein
major Indian banks announced new schemes
to attract customers. For instance, the State
Bank of India, the country’s largest bank,
announced a mortgage rate of 8% for the first
year. Other public and private banks followed
suit by lowering mortgage rates.
The demand for residential apartments has
also picked up post February 2009. In a
survey done by Jones Lang LaSalle Real
Estate Intelligence Service, the actual sales
of apartments grew during Jan-Mar, 2009.
The National Capital Region (NCR) recorded
sales of 4,491 apartments in Jan-Mar, 2009,
up 11% QoQ, while sales in Mumbai were flat
at 740 apartments.
Commercial
Cushman & Wakefield estimates that the total
supply for commercial office space across
the top eight cities of India in 2008 was
approximately 60 m.s.f.. While this was about
34% higher than supply of the previous year,
it was also 24% less than the office supply
Demand Pull Factors
- Robust & sustained macro economic growth
- Upsurge in industrial & business activities, espe-
cially new economic sectors
- Favorable demographic parameters
- Significant rise in consumerism
- Rapid urbanisation
- Gamut of financing options at affordable interest
rates
Resultant Impact
- Increasing occupier base
- Significant rise in demand for office/industrial
space
- Demand for newer avenues for entertainment,
leisure & shopping
- Creation of demand for new housing
Supply Push Factors
- Policy & Regulatory reforms (100 per cent FDI)
- Positive outlook of global investors
- Fiscal incentives to developers
- Simplification of urban development guidelines
- Infrastructure support & development by Govt.
Resultant Impact
- Entry of number of Domestic & Foreign players
- Increasing competition & consumer affordability
- Easy access to means of project financing
- Increases developers risk appetite and allows
large scale development
- Improved quality of real estate assets
- Development of new urban areas and effective
utilization of prime land parcels in large cities
FACTORS DRIVING
REAL ESTATE
Source: IBEF
31. 29
projected for 2008 at the beginning of the
year. Delhi NCR accounted for the highest
supply (14.07 m.s.f.) in 2008, followed by
Bangalore, Chennai and Mumbai. These four
metropolitan centres together accounted for
nearly 74% of the total office supply across
the major cities. SEZ supply for the year was
recorded at approximately 19.3 m.s.f., with
Bangalore accounting for the highest SEZ
supply (5.71 m.s.f.), followed by Pune (4.10
m.s.f.) and Chennai (3.87 m.s.f.).
Commercial office space absorption across
major cities increased by nearly 6% in 2008
with almost 30% of the total dominated by pre-
commitments from previous years. Delhi NCR
saw nearly 5.86 m.s.f. of pre-commitments for
projects due in 2009, the highest among all
major cities. Fresh pre-commitments for the
year (to be absorbed by 2009) amounted to
12.80 m.s.f., which was a 45% drop from that
of 2007 and stands testimony to the cautious
expansion plans from the corporate sector in
this current overcast economic climate.
Retail
The mall supply in India’s top metropolitan
centres in 2008 stood at 9.60 m.s.f.,
approximately 17% increase over that in 2007.
However, it was still a significant shortfall of
over 50% from earlier mall supply projections
(Source: Cushman & Wakefield).
The soaring rentals of malls and main streets
in major metropolitan cities have turned
retailers cautious with many stalling their
immediate expansion plans or altering their
business strategy by entering value retailing,
for instance. This movement is likely to open
a plethora of opportunities for developers
and investors alike, particularly in the Tier II
and Tier III cities that offer quality space and
affordable rentals for retailers with product
offerings that are suited for consumers at
these locations. Established global retailers
such as the German Metro AG, the South
African Shoprite, Wal-Mart and now UK’s
Tesco, etc., have already made their entry into
India. Luxury brands such as Armani, Aigner,
Versace, Louis Vuitton, Dolce & Gabbana,
Zegna and Hugo Boss among many others
have also established their presence across
major Indian cities. The collection at UB City,
Bangalore and DLF Emporio at New Delhi’s
Vasant Kunj are the country’s first operational
luxury malls for Indian consumers.
The concept of specialised malls is also
gaining popularity with auto malls, jewellery
malls, furniture malls and electronics malls
anticipated to be part of the sector in the
future. Many developers are further setting
up mixed-use projects offering hotels,
amusement facilities and commercial space.
Rising income levels and a changing outlook
towards branded goods is expected to
translate into higher demand for shopping
mall space, fuelling strong growth in mall
development activities. CRISIL research
expects an investment of Rs. 176 billion in
organised retailing over the next 5 years.
Even though mall development activity was
initially restricted to a few major cities like
Mumbai and Gurgaon, it is now expected to
extend to other cities like Surat, Pune and
Ahmedabad, thus resulting in increases in
real estate activity in those cities.
Hotels
Business in the hotel industry, much like
any other sector, is cyclical in nature. Any
significant change in the economy, such as
the slowdown witnessed in 2H FY09, affects
the sector resulting in lower occupancy levels,
delays in upcoming projects and anticipated
decrease in room rentals.
Despite the temporary slowdown that the
Indian hospitality industry faced due to the
global economic crisis, India is still one of the
world’s fastest growing hotel markets. With
an overall increase in leisure and business
travellers over the past few years, India’s
hospitality industry has attracted global
attention.Hotelsacrossallsegmentsachieved
healthy occupancy levels until end-2007. A
buoyant domestic economy, the government’s
open sky policy, an overall real estate boom,
32. 30
initiatives to liberalise foreign investment and
especially the Ministry of Tourism’s (MoT)
efforts to communicate the ‘Incredible India’
campaign together contributed to a robust
demand for hospitality space in major cities
across India.
Foreign tourist arrival increased by almost
65%, from 2.38 million in 2002 to 3.92 million
in 2005, while foreign exchange earnings have
grown by over 95% during the same period. In
2007 inbound tourist arrival touched 5 million,
registering an annual growth of approximately
12%. Foreign exchange earnings from
tourism for the same period also witnessed an
impressive annual growth of 33% from USD 9
million in 2006 to USD 11.96 million in 2007.
In keeping with the current growth rate, India’s
hospitality industry is anticipated to grow at 8
per cent per annum between 2007 and 2016.
Cushman & Wakefield estimates that India
needs to build another 50,000 rooms in
the luxury 5-star up market category and
100,000 rooms in the mid market category.
The upcoming new room inventory should
not cause much concern for Mumbai & Delhi
as both the cities can easily absorb another
3,000 to 5,000 rooms in the next 2-3 years.
Between 25,000 to 27,000 new up-scale hotel
rooms are expected to be added in major
Indian cities by the year 2011 as compared
to a total of nearly 35,000 rooms in mid-scale
and budget segment. Total stock of hotel
rooms is expected to lag behind demand
till 2011.
II. YEAR GONE BY……
Even in a year of tight credit and liquidity
conditions, the Company took strategic
initiatives to face the challenges and reiterated
its leadership position in the industry.
1. CHANGING MACRO ENVIRONMENT
During the second half of FY09, events
around the world and the stringent
regulations by RBI led to a situation of
tight liquidity and tight credit availability
for Indian corporates. At times when the
economic environment and sentiments
wereweakeningglobally,realestatecame
to be seen as a sector with a high degree
of credit constraints and a higher risk
weightage. This was further aggravated
by the increase in interest rates, whereby
the cost of finance for Indian companies
kept increasing.
The situation became more adverse with
buyer sentiments becoming weak on
account of job uncertainties impacting
their future income in the prevailing
recessionary environment. This led the
buyers to defer their decision of buying
a house, which was coupled with an
anticipation of fall in prices. Investing in
property in such circumstances became
extremely difficult for most people.
Moreover, MNCs as well as Indian
Corporates withheld their expansion
plans, thereby impacting the demand for
office and retail spaces.
Due to the above reasons, the months
post September 2008 witnessed low
demand and low volumes of fresh sale
and lease.
2. STRATEGY
In order to weather the tough economic
environment over the last year, DLF
adopted and implemented a strategy
which allowed it to be in a relatively
comfortable liquidity position, whilst
it tested the right market conditions
where it could attract significantly larger
number of end customers. DLF managed
to effectively service all its debt and
interest obligations, without taking the
restructuring route. It ensured that all
commitments to stakeholders, customers,
financiers and employees continue to
be met in time.
During the year, the Company succeeded
in re-paying short term debt by raising
long term debt mainly by securitizing cash
flows. The quality of the debt portfolio
33. 31
improved substantially with an average
maturity in excess of 4 years.
In order to reduce debt, the Company also
initiated a strategic and comprehensive
portfolio review, of both real estate assets
and non-real estate businesses, with a
view to aggressively exit/bringing in new
third party investors in the non-strategic
assets/businesses. The Company, post a
review, decided to exit its large township
projects in Bidadi and Dankuni given the
uncertainties regarding land acquisition
on the part of the government. DLF is
further contemplating similar measures
for other long gestation projects / assets.
Additionally, the Company continued its
focus on cost reduction in all areas and
maintained tight focus on cash flows to
ensure that operating cashflows met all
operating requirements, including finance
charges. The completion schedule of
various projects in commercial and retail
categories has also been moderated
in line with market requirement and
customer commitments. Accordingly, it
slowed down construction on 27 m.s.f. of
office and retail projects combined.
For better value to its customers, DLF
rescued its product offering at various
locations. Looking at the changed
scenario, the Company revamped the
apartment size and altered the launch
price of new projects- like The Summit in
Hyderabad and The Westend Heights in
Bangalore - in line with the expectations
of customers. The pricing and apartment
size in new projects were modified with a
view to bring down the ticket size of the
units for the benefit of the buyers.
TheCompanyalsorevisedpricingofsome
projects that had already been booked to
keep the price in line with the prevalent
market value. In an endeavour to pass on
the benefits of reduced construction cost
to its customers, DLF revised the price of
its apartments in Gardencity, DLF OMR
in Chennai and New Town Heights in
New Gurgaon.
While the customers benefited with
overall cost of the apartments reducing
by approx. 15-25%, the gross margins for
the Company on these projects declined
by 10% to 20-25%.
In terms of new launches, DLF followed
a cautious approach given the poor
customer sentiments. New leasing
volume was also subdued, while there
were marginal cancellations of pre-leases
during the year.
However, in a continued effort to test
new markets and offer optimum product
to customers for which demand exists,
DLF launched few projects at aggressive
price points in the beginning of current
fiscal, further establishing its position
as the industry leader. These projects
included city centric project – DLF Capital
Greens (in New Delhi) and affordable
housing projects – DLF Westend
Heights (in Bangalore) and The Summit
(Hyderabad).
Going forward, DLF will continue to focus
on liquidity preservation and launch
projects in line with market demand after
adequate research of the same. DLF
plans to adopt the following steps as a
part of its corporate strategy:
Relinquish marginal projects
The Company intends to relinquish
its projects where the development
margins are low in today’s economic
context. The objective is to improve
cash flows today rather than
developing those projects over a
period of 2-3 years while running a
risk during the period of construction
of these projects.
Rationalise construction
The focus of the Company is on timely
execution and delivery of its projects
to meet the timelines committed to
its customers. It, thus, intends to
34. 32
prioritize its construction activity and
construction spend with focus on
conserving capital. DLF has already
slowed down construction of 27 m.s.f.
of capital intensive office and retail
projects.
Conserve liquidity
• Improved debt profile
The Company is focusing on
improving its debt profile with a
clear visibility of the action plan
which is expected to reduce
debt by half. DLF has met all
its commitments and made long
term arrangements for balance
debt, without any restructuring.
DLF has already raised significant
long term debt to meet short term
obligations. The average maturity
of debt portfolio is in excess of
48 months, showing improved
quality of debt profile.
The average interest cost for the
debt is at 12.38%. The Company
has its debt repayment schedule
well in place and expects to bring
down its net debt to equity ratio
to 0.3 in the near future from a
level of 0.6.
• Payment of short term loans
DLF intends to pay all its short
term obligations without any
restructuring / rescheduling.
Since October 2008, the
Company repaid its obligations in
excess of Rs. 5,000 Crores and
successfully raised Rs. 2,800
Crores in the form of rent/sales
securitized loans to pay short
term obligations.
• Successful fund raising
The Company also plans to raise
Rs. 5,500 Crores from sale of
non-core assets and expects an
additional inflow of more than
Rs. 2,000 Crores from DLF
Assets Private Limited (DAL).
Focus on core businesses going
forward
During the year, DLF focussed on
portfolio adjustments towards liquidity
preservation and de-leveraging
through unlocking value from non-
strategic assets or assets which do
not have any short to medium term
utilization.
Going forward, DLF intends to
focus on its key business verticals –
homes, office and retail (commercial
complexes and retail malls). The
primary focus will be on execution
and delivery of projects which have
been pre-sold/ pre-leased. Following
this, DLF plans to make new launches
of saleable projects, with a target to
launch around 16 m.s.f. of homes.
It will plan fresh launches for office
and retail malls for leasing depending
on the visibility on pre-leasing in the
coming quarters.
The Company will continue to
aggressively test the market for
affordable housing across newer
locations, with plans to launch 6-7
m.s.f. of mid-income homes during
FY10. It also plans to launch 8-9 m.s.f.
of “city-centric” housing projects. Apart
from these, the Company also plans
to launch 1-2 m.s.f. of commercial
complexes as well as engage with
office clients to grow leasing volumes
at competitive rates.
35. 33
Financial Review 2008-09
Revenue & Profitability
During the fiscal 2008-09, DLF
consolidated revenues of Rs. 10,431
Crores for FY09 down by 29% from Rs.
14,684 Crores for FY08. EBIDTA stood
at Rs. 5,986 Crores, down by 40% as
compared to Rs. 9,961 Crores in the
previous year. Net profit remained at
Rs. 4,469 Crores, a fall of 43% from
Rs. 7,813 Crores. The EPS for FY09
stood at Rs. 26.24 as compared to
Rs. 46.90 for FY08.
The decline in revenue was primarily on
account of limited new sales and fresh
leases as a result of lower demand
witnessed in the year. The revenues
recognized from DAL also declined to
Rs. 4,004 Crores from Rs. 6,943 Crores in
the previous year with the management’s
decision to stop recognizing further
revenues from DAL on account of low
pre-leasing activity for DAL properties.
The revenue recognized on PoCM basis
also fell as a result of reprioritisation of
projects to tide over the adverse credit
and liquidity conditions.
The revenue and profit figures of the
Company during the year were after
adjusting for losses contributed by non-
core, like DLF Pramerica Life Insurance,
Hotels & Power, amounting to Rs. 163
Crores. These are new businesses
of the Company which are still being
nurtured, but are expected to contribute
significantlyoncetheybecomeoperational
in full swing.
To provide maximum value to customers
in difficult economic conditions, DLF
announced / gave price reset and other
benefits to customers amounting to a
total revenue impact of Rs. 688 Crores,
a part of which reflected in the numbers
for 2008-09 as well.
The rental income during the year
increased to Rs. 520 Crores from
Rs. 285 Crores in the previous year,
despite subdued volumes of fresh
leasing and marginal cancellations of
pre-leases during the year. The year
saw launch of commercial complexes
across the country and premium
homes targeted at mid-income segment.
Total expenditure declined to Rs. 4,445
Crores from Rs. 4,722 Crores during
last fiscal. The construction cost was
contained at Rs. 3,229 Crores from
Rs. 4,000 Crores as a result of decline
in construction costs and reduced
construction activity, with certain projects
being put on hold. The staff cost increased
to Rs. 454 Crores from Rs. 300 Crores
and the other expenditure rose to Rs.
762 Crores from Rs. 424 Crores.
The finance charges increased to Rs. 555
Crores (excluding capitalized interest)
as against Rs. 310 Crores (excluding
capitalized interest) in the previous year,
despite high interest rates prevailing for
most of the year. The Company was able
36. 34
to contain its interest costs due to efficient
mix of various debt instruments.
The direct tax outflow from DLF was
Rs. 750 Crores.
EBIDTA margins saw a decline to 57%
from 68 % in the previous year, owing to
focus on launch of mid-income homes,
and decline in launch of commercial
complexes and luxury homes. Decline in
revenues booked on account of DAL also
contributed to the decline in the margins.
Balance Sheet
With a net worth of Rs. 24,154 Crores,
net gearing of 61% and cash reserves
of Rs. 1,196 Crores, DLF has a
strong balance sheet even after a
turbulent year.
The Company met all its stakeholders’
commitments in time during the year,
including its commitments towards
debt servicing to banks and financial
institutions, without any restructuring
of debt.
DLF also raised significant long term debt
to pay its short term obligations and met
its operating requirements with prudent
internal cash flow management. The
Company’s debt now has an average
maturity of over forty eight months.
The shareholders’ funds improved to
Rs. 24,154 Crores from Rs. 19,688
Crores. The loan funds saw an increase
to Rs. 16,320 Crores from Rs. 12,209
Crores. The net debt-equity ratio stood at
0.62 as compared to 0.51 at the beginning
of the year, which is amongst the lowest
in the real estate sector.
Net fixed assets grew to Rs. 7,912
Crores from Rs. 4,819 Crores on account
of capitalization of leased-out assets and
movement of some land parcels from
stocks. Capital work-in-progress rose to
Rs. 5,688 Crores from Rs. 5,184 Crores
as area under construction for to-be-
leased out assets grew.
Investments grew marginally to Rs. 1,402
Crores from Rs. 911 Crores on account
of investments in joint ventures and
consolidation of investments made by
Insurance JV. Stocks grew on account of
increase in work-in-progress as projects
under construction grew.
The increase in sundry debtors was owing
largely due to increase in receivables
from DLF Assets during the year, while
receivablesfromnon-DALsalesremained
similar. Receivables from non-DAL sales
usually remain high as revenues get
booked under percentage of completion
method (PoCM) on the balance sheet
date while the customer payments would
be due a few days later. The increase in
sundry debtors need also be seen in light
with advances from customers, which is
reflected in current liabilities and stands
at Rs. 1,700 Crores.
The cash and bank balances reduced to
Rs. 1,196 Crores from Rs. 2,142 Crores
at the beginning of the year as cash
got deployed in working capital. The
increase in loans and advances to Rs.
9,712 Crores from Rs. 7,369 Crores was
on account of increase in advance tax
payment, increase in advances during
course of business and partly on account
of advances outside the group.
The current liabilities include advances
received for sale of properties that were
not recognized in sales revenue. While
the current liabilities stood at Rs. 4,140
Crores, the advances from customers
amounted to Rs. 1,700 Crores, reflecting
that other current liabilities have come
down.
BUSINESS REVIEW 2008-09
1. HOMES
Built on a foundation of strong lineage
and an established reputation, DLF has
been a trendsetter in contemporary urban
development and housing. These
37. 35
developments have always been all
embracing with comprehensive solutions
for eminent and quality living.
DLF has pioneered some of the
best-known urban housing and retail
destinations in Delhi including South
Extension, Greater Kailash, Rajouri
Garden, Model Town, Hauz Khas and
Kailash Colony.
The product categories of the Company
in homes segment deliver the strengths
of good architecture, appropriate
designs, impressive aesthetics and safety
features.
DLF’s dominant position in Indian
homes segment:
• Trusted brand with superior execution
track record
• Pioneered townships and group
housing in India
• Complete offering of super luxury,
luxury and mid-income homes
• 195 m.s.f. of plots and 21 m.s.f. of
group housing developed
• 290 m.s.f. of development potential
• 16 m.s.f. under construction
Performance FY09
The year 2008-09 started with carrying
forward the success of mid-income
homes launched in FY09. However,
with the change in the overall economic
environment, the sales saw a slump post
October 2008. This was primarily due
to weak customer confidence in buying
homes on account of uncertainty of future
incomes, coupled with a perception and
anticipation of price of homes being
reduced.
Looking at the changed scenario, DLF
revampedfewofitsofferingsandlaunched
new projects in line with the expectations
of customers. It also restructured some
of its projects and revised prices in
some others.
Launches FY09
• Westend Heights in BTM, Bangalore
• Green Estate in DLF Nandigama,
Hyderabad
• DLF Express Towers in DLF New
Gurgaon
• DLF Express Greens in DLF New
Gurgaon
38. 36
• The Summit in Kokapet, Hyderabad
• New Town Heights, DLF Kakkanad
Outlook
Given the prevalent sentiments, DLF
plans to follow a cautious approach
towards new launches. However, as
economic conditions stabilize, it plans
to make selective new launches based
on targeted market research in different
markets to catch the changing demand
scenario.
The first quarter of FY10 has already
started showing positive signs with ~
3 m.s.f. sold in homes segment. 1,389
apartments were booked in a single day
in the newly launched project – Capital
Greens – in the heart of Delhi during
April 2009. Even in Bangalore, over 700
apartments were booked in Q1 FY10
alone. Seeing these positive trends,
the Company will continue to launch
new residential projects in various
locations across the country, after
adequate research of market demand, at
the best prices.
The Company will continue to focus on
affordable housing with test launches
across newer locations, alongwith
launching some strategic “city-center”
housing projects, with an endeavour
to generate buyer interest by providing
excellent location and superior product
specifications.
2. OFFICES
With over six decades of excellence,
DLF is a name synonymous with global
standards, new generation workspaces
and lifestyles. It has the distinction of
developing commercial projects and
IT parks that are at par with the best in
the world.
DLF has pioneered the ‘walk-to-work’
concept with the 3,000-acre DLF
City, where well-planned residential
developments are integrated with modern
business and commercial complexes.
DLF’s contemporary workplaces are
equipped with modern facilities that
synchronize functional efficiencies with
aesthetic appeal and have been identified
as preferred destinations by leading
MNCs and Indian corporate, including
many Fortune 500 companies.
DLF Commercial offers ready-to-move-in
as well as built-to-suit options in Campus
Style development with scalable growth
and large landscaped greens, effective
disaster management plan, integrated
retail and recreation areas, provision for
amenities like gym, food court, health
club, business centre, 24x7 medical
services, etc.
DLF has become a preferred name with
many IT & ITES majors and leading
Indian and International corporate
giants, including GE, IBM, Microsoft,
Canon, Citibank, Vertex, Hewitt, Fidelity
Investments, WNS, Bank of America,
Cognizant, Infosys, CSC, Symantec and
Sapient, among others.
DLF’s dominant position in Indian
offices segment...
• Founder and pioneer of Grade A office
leasing market
• Leveraging location advantages and
deep customer relationships
• Occupancy levels of ~ 98%
• More than two-third of client base
belongs to Fortune 500 list
• Mix of IT/ITES and non-IT/ITES
businesses
• 18 m.s.f. of completed commercial
space
• 68 m.s.f. of development potential
• 16 m.s.f. under construction
Performance FY09
DLF had tied up leases for office space
upto December 2009. With the economic
39. 37
environmentchangingthroughthesecond
half of FY09, the Company focused its
strategy on execution and delivery of the
pre-leased space with reduced stress
on fresh bookings. The Company also
slowed down construction on some of its
projects and focussed on projects where
the delivery was round the corner.
Through the year, DLF pre-leased 1.12
m.s.f. of fresh office space while some
marginal cancellations were witnessed in
the space booked earlier. With its strong
emphasis on execution and meeting
commitments of delivery, DLF delivered
4.98 m.s.f. of space to its customers.
DLF has 16 m.s.f. of office space under
construction against 17 m.s.f. of pre-
leases in place.
During the year, the Company also
applied for de-notification of 5 of its SEZs,
and received in principle approval from
the Central Government for the same.
Outlook
DLF intends to expedite execution and
deliveries wherever backlog exists and
heighten the construction activity based
on visibility of pre-leasing. The strategic
locations of Company’s land resource
for office development and excellent
client relationships over the years will
enable it to increase its leasing activity
as and when the markets improve and
corporates revive their expansion plans.
3. RETAIL
DLF has different retail real estate
development formats catering to the
entire spectrum of the retail market.
Through this broad based approach, the
Company is able to serve the needs of
customers with different buying patterns
and purchasing power.
