DLF – CORPORATE GOVERNANCE REPORT

EQUITABLE TREATMENT OF SHAREHOLDERS

The extent of disclosure of shareholding pattern – Above Average (since shareholding information on promoter, exec and non exec

directors are disclosed.) The extent to which the majority shareholder acts in

the interest of minority shareholders and all other stakeholders – Average (Almost 1100 minority shareholders were deprived when

there were not made a part of DLF’s restructuring.) The systems in place to detect and prevent insider

trading – Very High (DLF has a policy of prevention of Insider Trading in place in

accordance with SEBI regulations. No case registered till date.)

Rating of this attribute – 4 / 10

VALUE CREATION FOR STAKEHOLDERS

Stakeholder Key Parameters Remarks Rating

Shareholder

•Return on Investments (ROI) = 20.2%•Dividend Rate = 200% (including interim dividend at 100%)

DLF’s balance sheet size improved significantly with the launch of its public offering in the equity markets. The shareholders’ funds improved to Rs 196.9 bn from Rs 35.6 bn

High

VALUE CREATION FOR STAKEHOLDERS

Stakeholder Key Parameters Remarks Rating

Debtholder

•Crisil Credit Rating – AA•Debt Protection Measures – Strong

•Strong Balance sheet to withstand downtimes and leverage opportunities (Net worth - Rs 196,883 mn; cash reserves - Rs. 21,421 mn)

•Strengths partially offset by –• Risks inherent to Indian

real estate industry• DLF’s aggressive plans

to diversify into non real estate businesses (hospitality, insurance etc…). New ventures are capital intensive, and have long gestation periods. Therefore, DLF will be exposed to significant business risks as a result of such a diversification

Above Average

VALUE CREATION FOR STAKEHOLDERS

Stakeholder

Key Parameters Remarks Rating

Customer •Market Share – 15 to 20%•Customer Relationship Management – Effective

DLF is in the process of setting up systems for customer management –

•Capable of handling a huge integrated database that shall be used for auto communication, call/lead management and interactive web communication

•Revamping of corporate website to accommodate customer facilities like online payments, auto-communication, 3D-walkthroughs for new projects and community blogs have also been initiated

Above Average

VALUE CREATION FOR STAKEHOLDERSStakeholder

Key Parameters Remarks Rating

Employee •Employee Stock Options:Granted – 4,042,134Committed – 991,876

•Employee Strength – Increased from 2478 last year to 3700

•Labor Strength – 1000

•Compensation –Reduction in Compensation Cost:Rs. 6,49,64,533Impact on Profits : Increase by Rs. 4,28,83,088(net of Income tax)

•Effective Employee Communication (Various channels to provide information and receive feedback, including fortnightly HR Newsletter-SAMPARK, intranet (DLF Connect) and internal HR helpline successfully launched)

•In the process of constituting an Employee Welfare Trust to implement various employee welfare schemes

•Strengths partially offset by –• Labors having to work in

two extended shifts of 10 hours each, to increase productivity

• Reduction in compensation costs (in spite of increase in employee strength) to boost profits

Below Average

VALUE CREATION FOR STAKEHOLDERS

Stakeholder

Key Parameters Remarks Rating

Supplier •Credit Terms / Supplier Relations – DLF has Joint Ventures with several of its suppliers

•Restrictive credit flows continue in the real estate sector

•To mitigate these factors, DLF has set up professional teams, at corporate and local levels, to address the issue of project approvals

•DLF has independent JV’s in the execution space –

•Construction JV with Laing O’Rourke has substantially scaled up business•JV with WSP for engineering and design services added strength and technical expertise to the project design capabilities

High

VALUE CREATION FOR STAKEHOLDERS

Stakeholder

Key Parameters Remarks Rating

Society •Corporate Citizenship / Social Responsibility

•CSR integrated into the Company’s business strategy of Building India and becoming the world’s most valued real estate developer.

•Made significant investments in community welfare initiatives – • Education: Set up schools for

under privileged; Establishment of a residential non-profit school in carpentry and masonry for training potential employees

• Health: Set up Rural Primary Health Centres; First Aid Centres, Funded hospital

• Construction Workers: Setting up of a Sewage Treatment Plant; a garbage management system; provision of respectable housing on various DLF construction sites

Above Average

VALUE CREATION FOR STAKEHOLDERS

Shareholder – High Debtholder – Above Average Customer – Above Average Employee – Below Average Supplier – High Society – High

Rating of this attribute – CRISIL GVC Value 4

REFERENCES

http://www.suchetadalal.com/articles/display/80/2493.article.

http://www.financialexpress.com/news/Sebi-to-be-cautious-in-clearing-DLF-IPO/89513/

2008 Annual Report CRISIL Credit Rating – March 12, 2008