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Directors Report of DLF Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 50th Report on the business and operations of the Company together with the audited results for the financial year ended 31st March, 2015.

Consolidated Financial Results

(Rs. in crore)

2014-15 2013-14

Consolidated revenue/turnover 8,168.16 9,789.59

Gross Operating Profit (EBIDTA) 3,543.17 3976.79

Less: Finance Costs 2,303.86 2,463.25

Less: Depreciation 544.79 662.93

Profit before exceptional items 694.52 850.61 and tax

Exceptional items (67.87) (329.86)

Less: Provision for Tax 157.57 (83.63)

Profit before minority interest 469.08 604.38

Share of Profit/(loss) in associates (3.43) 7.08

Minority interest 33.30 56.54

Profit after Tax, minority interest 498.95 668.00 and before prior period items

Prior period items (net) (41.28) 21.79

Net Profit 540.23 646.21

In FY'15, your Company reported consolidated revenues of Rs. 8,168 crore, a decrease of 17% from Rs. 9,790 crore in FY'14. EBIDTA stood at : 3,543 crore, a decrease of 11% from Rs. 3,977 crore in the previous year. Net profit after tax, minority interest and prior period items was at Rs. 540 crore, a decline of 16% from Rs. 646 crore. The EPS for FY'15 stood at Rs. 3.03 as compared to Rs. 3.65 for FY'14.

The cost of revenues including cost of land, plots, development rights, constructed properties and others stood at Rs. 3,285 crore as against Rs. 3,880 crore in FY'14. Staff cost decreased to Rs. 349 crore versus Rs. 576 crore. Depreciation, amortization and impairment charges were at Rs. 545 crore versus Rs. 663 crore in FY'14. Finance cost decreased to Rs. 2,304 crore from Rs. 2,463 crore in FY'14.

Review of Operations

Your Company's Balance Sheet as at 31st March, 2015 reflected a healthy position with a net worth of 29,168 crore.

Net debt was Rs. 20,965 crore as on 31st March, 2015. The net debt to equity ratio was at 0.72.

Your Company's development business primarily focuses on the development and sale of residential real estate which include plotted developments, houses, villas and apartments of varying sizes and integrated townships, with a focus on the high end, luxury residential developments. The development business also consists of certain offi ces, SEZ and shopping complexes, including those that are integral to the residential developments they are attached to.

Your Company has now primarily categorized its development business into two broad categories viz. Gurgaon DevCo and National DevCo. Both these geographical segments are independently responsible and accountable for all activities across the product value chain from acquisition of land, obtaining approvals, project planning, execution, to launch, sales & marketing and final delivery of the developed property to the customers.

As at 31st March, 2015, your Company had 46 msf of development projects under construction.

Your Company's lease business involves leasing of its developed offi ces, SEZ and retail properties. One of the key objectives of its lease business is to achieve returns from investments in its portfolio properties within a targeted timeframe. Another key objective is to achieve high occupancy rates for the leased portfolio properties. The utilities and facility management business supports and complements the lease business.

As at 31st March, 2015, your Company's lease business comprised completed offices, SEZ and retail properties with leasable area of approximately 29.4 msf, which yielded annuity income of approximately Rs. 2,200 crore.

The performance of the Company on standalone basis for the year ended 31st March, 2015 is as under:

Standalone Financial Results

(Rs. in crore)

2014-15 2013-14

Turnover 4,061.88 3,825.88

Gross Operating Profit 2,680.51 2,673.44

Less: Finance Costs 1,403.34 1,666.81

Less: Depreciation 55.82 77.98

Profit before exceptional items 1,221.35 928.65 and tax

Exceptional items (net) (29.49) (390.16)

Less: Provision for Tax 277.56 8.82

Profit after Tax 914.30 529.67

Less: Prior period items (net) (25.77) 2.83

Net Profit 940.07 526.84

Future Outlook

Your Company continues to implement its strategy to concentrate on its core business & geographies and to develop a right product mix well suited for its markets. Your Company remains committed to invest in the development of supporting infrastructure in its core markets to match the global standards thereby providing a healthy and safe lifestyle.

The Securities and Exchange Board of India ('SEBI') has notified the SEBI (Real Estate Investment Trusts) Regulations, 2014 (REITs) guidelines and the Finance Ministry has rationalized the tax structure for these instruments to a great extent. Your Company has over the last decade created a huge platform of annuity assets, which continues to grow as offi ces, SEZ and retail segment finds traction as the GDP grows. The REITs platform therefore provides an excellent avenue for monetizing these assets thereby re-cycling capital for fuelling future growth without losing control of these long-term assets.

With the introduction of REITs and the demand for residential products showing early signs of improvement, your Company remains committed to achieve a robust, conservative capital structure by matching long-term capital with long-term assets, reducing debt on the books, thereby improving both the quality and pricing of its debt.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 2 per equity share (100%) (previous year - Rs.2 per equity share) for the FY'15 amounting to Rs. 356.39 crore (previous year Rs. 356.35 crore), subject to approval of the members.

Reserves

The Company proposes to transfer 10% of standalone net profit amounting Rs. 94 crore to general reserve. Further, Rs. 60.16 crore is proposed to be transferred to debenture redemption reserve.

CAPEX

Your Company will continue to incur capital expenditure for the completion of existing offices, SEZ and retail projects. Your Company plans to incur capital expenditure towards development of certain retail projects in the near to medium future. Further, in order to mitigate the risks relating to commodity infi ation and rising labour costs, your Company had introduced an escalation clause in some of its development projects. Your Company believes that this will assist in partially mitigating increase in construction costs in a fair, efficient and transparent manner.

Change in Share Capital

During the year under review, the Company has issued and allotted 4,76,060 equity shares of Rs. 2 each fully paid upon exercise of stock options by the eligible employees under the Employee Stock Option Scheme, 2006 thereby increasing the paid- up share capital by Rs. 9,52,120.

Credit Rating

CRISIL has reaffirmed the ratings at 'CRISIL A/CRISIL A2 ' on the bank facilities and debt instruments.

ICRA has also reaffi rmed the long-term rating of [ICRA]A (pronounced ICRA A) assigned to NCD programme and bank facilities.

Fixed Deposits

The Company has not accepted/renewed any public deposits during the year under review.

Subsidiary Companies and Consolidated Financial Statements

The consolidated financial statements of the Company and its subsidiaries, prepared in

accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India, forms part of this Annual Report. In terms of Section 136 of the Companies Act, 2013 ('the Act'), fi nancial statements of the subsidiary companies are not required to be sent to the members of the Company. The Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company if so desired and said annual accounts will also be kept open for inspection at the Registered Office of the Company.

The Company has appointed Independent Director(s) in its material non-listed Indian subsidiaries in compliance with the provisions of listing agreement with stock exchanges.

The Company has formulated a policy for determining 'material' subsidiaries and such policy is disclosed on Company's website at the link http://www.dlf.in/dlf/wcm/connect/dlf-corporate/ home/investors/downloads/

As on 31st March, 2015, the Company has 130 subsidiary companies in terms of the Act. During the year under review, three companies became subsidiaries and sixteen companies ceased to be subsidiaries.

A separate section containing a report on performance and financial position of each of subsidiaries, associates and joint ventures included in the consolidated financial statements of the Company.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings/Outgo

The particulars required to be disclosed under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given at Annexure-A hereto and form part of this Report.

Particulars of Employees

The information required pursuant to Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ('the Rules') in respect of employees of the Company, is annexed to this Report.

In terms of fi rst proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars Rule 5(2) & (3) of the Rules which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any Member interested in obtaining a copy thereof may write to the Company Secretary.

Employee Stock Option Scheme (ESOS)

Information required in terms of Clause 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 is at Annexure-B.

The certificate, as required under Clause 13 of the said Regulations, as obtained from the Statutory Auditors with respect to the implementation of the Company's Employee Stock Option Scheme, 2006, shall be placed at the forthcoming Annual General Meeting.

Listing at Stock Exchanges

The equity shares of your Company are listed on NSE and BSE (the stock exchanges). The non- convertible debentures issued by your Company are also listed on the Wholesale Debt Market (WDM) segment of NSE. The listing fees for the year 2015-16 have been paid to the stock exchanges.

Pursuant to Clause 5A of the listing agreement, the Company has opened two separate suspense accounts for shares held in dematerialized and physical form, which remain unclaimed, the details of which are mentioned in the Corporate Governance Report.

Management Discussion & 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 Corporate Governance Report, as stipulated under Clause 49 of the listing agreement, forms part of this Report.

The requisite certificate from the Statutory Auditors of the Company, Walker Chandiok & Co LLP,

Chartered Accountants, confirming compliance with the conditions of corporate governance as stipulated under the aforesaid clause is attached to Corporate Governance Report.

Directors' Responsibility Statement

In terms of provisions of Section 134(5) of the Act, your Directors confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) the Directors have 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 the Company as at 31st March, 2015 and the profit and loss of the Company for that period;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the Directors have prepared the annual accounts on a going concern basis;

(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal fi nancial controls are adequate and were operating effectively; and

(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Audit Committee

The Composition of the Audit Committee is provided in the Corporate Governance Report forming part of this report. All the recommendations made by the Audit Committee were accepted by the Board.

Auditors

Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors, holds office until the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. Certifi cate from the

Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 141(3)(g) of the Act and they are not disqualified for re-appointment.

Auditors' Report

(i) Emphasis of Matter given in point no. 9 of the Auditor's Report on standalone financial statements read with note no. 48 of Schedule to the standalone financial statements, are self-explanatory and do not call for any further comments.

(ii) Emphasis of Matter given in point no. 9 of the Auditor's Report on consolidated financial statements read with note no. 38 of the Schedule to the consolidated fi nancial statements, are self-explanatory and do not call for any further comments.

Cost Auditors

The Board has appointed M/s R.J. Goel & Co., Cost Accountants, to audit cost records of the Company pertaining to real estate development activities for FY 2014-15.

Secretarial Auditor

The Board has appointed Dr. K.R. Chandratre, Practicing Company Secretary, to conduct Secretarial Audit for the FY 2014-15. The Secretarial Audit Report for the financial year ended 31st March, 2015 is at Annexure-C. The said report does not contain any qualifi cation, reservation and adverse remarks.

Directors

The Board of Directors on the recommendations of the Nomination and Remuneration Committee appointed Lt. Gen. Aditya Singh (Retd.) and Mr. A.S. Minocha, as Additional Directors (in capacity of Independent Director) on 29th August, 2014 and 20th May, 2015, respectively, in compliance to Section 149 and 161 of the Act read with Clause 49 of the listing agreement and Article 101(2) of Articles of Association of the Company. Lt. Gen. Aditya Singh (Retd.) and Mr. Minocha will be holding the offi ce of Director till the date of ensuing Annual General Meeting of the Company. The Company has received notices under Section 160(1) of the Act from member(s) proposing their candidature for appointment as Directors.

The Board of Directors has recommended their appointments.

Subject to the proposed amendment in Article 102 of the Articles of Association of the Company, Mr. Mohit Gujral and Mr. Rajeev Talwar, Directors are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment. Brief resume of Directors seeking appointment and re-appointment along with other details as stipulated under Clause 49 of the listing agreement, are provided in the Notice for convening the Annual General Meeting and Corporate Governance Report.

Mr. T.C. Goyal, Managing Director was super- annuated with effect from 31st March, 2015. He has also resigned as Director of the Company w.e.f. the close of business hours on 31st March, 2015. The Board has placed on record its appreciation for the outstanding contribution made by Mr. Goyal in the development of the Company.

Ms. Pia Singh, upon resignation as Whole-time Director, continues to be a Non-executive Director from the close of business hours on 20th May, 2015.

All Independent Directors have submitted declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Clause 49 of the listing agreement.

During the year 2014-15, eight meetings were held by the Board of Directors. The details of board meetings and the attendance of Directors are provided in the Corporate Governance Report.

Mr. Ashok Kumar Tyagi is the Group Chief Financial Officer and Mr. Subhash Setia is the Company Secretary of the Company.

Business Responsibility Report (BRR)

The BRR describes the initiatives taken by the Company from social, environmental and governance perspectives. As a green initiative, the Company has hosted the said report on the website www.dlf.in

Corporate Social Responsibility

The Company has made significant contribution in community welfare initiatives including the underprivileged through education, training, health, environment, capacity building and rural-centric interventions through 'DLF Foundation' and other agencies. The employees of the Company also participated in many of such initiatives.

The Board has constituted the Corporate Social Responsibility Committee and based on the recommendation of the Committee, approved the CSR Policy of the Company in accordance with Section 135 of the Act and rules made thereunder. A copy of the CSR policy is available on the Company's website www.dlf.in

The Annual Report on CSR activities in the prescribed format under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is at Annexure-D.

Environment Policy

The Company has over the years, gone beyond the requirements of law in improving the environment in the ecosystem that it operates in and has formalized and adopted a Corporate Environment Policy which is also available on the Company's website www.dlf.in

Extract of Annual Return

The extract of the Annual Return in Form MGT-9 as provided under Section 92(3) of the Act is at Annexure-E.

Particulars of Loans, Guarantees and Investments

Particulars of loans, guarantees and investments under Section 186 of the Act are provided in the notes to the standalone financial statements.

Particulars of contracts or arrangements with related parties

All contracts or arrangements with related parties, entered into or modified during the financial year, were on arm's length basis and in the ordinary course of business. All such contracts or arrangements have been approved by the Audit Committee. No material contracts or arrangements with related party were entered into during the year under review. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Act read with rules made thereunder.

In line with the requirements of the Act and listing agreement, the Company has formulated a Policy on Related Party Transactions which is also available on Company's website - www.dlf.in. The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties.

Disclosures on related party transactions are provided in notes to fi nancial statements (please refer to note no. 32).

Nomination and Remuneration Policy

The Nomination and Remuneration Policy containing guiding principles for payment of remuneration to Directors, Senior Management, Key Managerial Personnel and other employees including Non-executive Directors along with Board Evaluation criteria are provided in the Corporate Governance Report.

Board Evaluation

The evaluation of Board, Committee(s) and individual Directors was carried out based on structured questionnaire encompassing parameters such as level of engagement and contribution, independence ofjudgment, safeguarding the interest of the Company and its minority shareholders etc. Further, details on performance evaluation along with familiarization programme are covered under the Corporate Governance Report.

Risk Management

Pursuant to the requirement of Clause 49 of the listing agreement, the Board has constituted a Risk Management Committee to frame, implement and monitor risk management plan of the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee also oversight in the areas of fi nancial risks and control. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on continuing basis. The Company's internal control system is commensurate with the nature, size and complexities of operations. The Company is continuously reviewing the internal financial controls systems and risk management process to further strengthen the same.

Significant and material orders passed by regulators or courts

There are no significant material orders passed by the regulators/courts which would impact the going concern status of the Company and its future operations. However, some of the significant orders are as under -

(a) The Competition Commission of India (CCI) on a complaint fi led by the Belaire/Park Place owners Association had passed orders dated August 12 and August 29, 2011 imposing a penalty of Rs. 630 crore on the Company, restraining the Company from formulating and imposing allegedly unfair conditions with buyers in Gurgaon and further ordered to suitably modify the alleged unfair conditions on its buyers.

CCI, by order on January 31, 2012 arising out of information filed by Magnolias Flat Owners Association against the Company, held that the Company contravened Section 4 of the Competition Act, 2002 (the 'Act') by abusing dominant position and imposing unfair conditions in the agreement and to modify unfair conditions. CCI also noted that penalty has already been imposed in case relating to Belaire project, therefore it would not be appropriate to impose penalty separately again as the nature of contravention is identical and in the same relevant market.

The said orders of CCI were challenged by the Company on several grounds by filing appeals before the Competition Appellate Tribunal (COMPAT).

COMPAT, by a common order, on May 19, 2014 (the 'COMPAT Order') confirmed CCI's fi ndings and the penalty imposed pursuant to its order dated August 12, 2011 and directed the Company to pay the penalty along with interest. However, COMPAT held that CCI was not justified in looking into and considering the apartment buyers agreement entered by the Company with allottees of Belaire housing complex in Gurgaon as those agreements had been entered into prior to notification of Section 4 of the Competition Act. COMPAT further held that CCI could not have directed modifications of the agreement as the power to modify the agreement under Section 27 is only in relation to Section 3 and cannot be applied for any action in contravention of Section 4 of the Act.

The Company and its subsidiaries have filed appeals in the Hon'ble Supreme Court of India against the order dated May 19, 2014 passed by the COMPAT. The Hon'ble Supreme Court of India vide order dated August 27, 2014 admitted the appeals and directed the Company to deposit penalty of Rs. 630 crore in the Court and the Company has complied with the order for deposit of amount with the Hon'ble Supreme Court of India.

(b) During the year ended March 31, 2011, the Company received judgments from the Hon'ble High Court of Punjab and Haryana cancelling the lease/sale deed of land relating to IT SEZ Projects in Gurgaon. The Company has filed Special Leave Petitions (SLPs) challenging the orders in the Hon'ble Supreme Court of India which have been admitted and Hon'ble Supreme Court stayed the operation of the impugned judgments till further orders.

(c) (i) Securities and Exchange Board of India

(SEBI) issued Show Cause Notice dated June 25, 2013 under Sections 11(1), 11(4), 11A and 11B of the SEBI Act, 1992 (the 'Act') read with Clause 17.1 of the SEBI (Disclosure & Investor Protection) Guidelines, 2000 ('DIP Guidelines') read with Regulation 111 of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 ('ICDR Regulations') against the Company and seven others. The Company and seven other noticees fi led their respective replies before SEBI. After hearings, SEBI on October 10, 2014 debarred the Company and six others from accessing the securities markets and prohibited them from buying, selling or otherwise dealing in securities directly or indirectly, in any manner, for three years. The Company and six other noticees filed appeals before the Securities Appellate Tribunal ('SAT').

SAT, by majority order dated March 13, 2015, allowed the appeals and quashed the said

SEBI order on the ground that there was nothing that suggested that the investors were prejudiced due to non-disclosure of information by the Company in its offer document in respect of Sudipti Estates Private Limited and other companies, or that such non-disclosure resulted in any benefi t to the Company or its Directors in violation of the erstwhile DIP Guidelines. It further held that the restraint would result in crippling the functioning of the Company and the investors would be prejudiced by such a prohibition. SEBI has filed statutory appeal (3718/2015) before the Hon'ble Supreme Court of India ('Supreme Court') against the company. SEBI has also filed separate appeals against directors and officer of the Company before the Hon'ble Supreme Court. On April 24, 2015, the Hon'ble Supreme Court admitted the appeal filed by SEBI and issued notice on interim application. No stay has been granted by Hon'ble Supreme Court on the Interim application filed by SEBI.

(ii) SEBI issued a common show cause notice dated August 28, 2013 to the Company and its directors and officer to show cause as to why penalty should not be imposed upon them under Rule 4 of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties by Adjudicating Offi cers) Rules, 1995 and Sections 15HA and 15HB of the SEBI Act. SEBI alleged that the Company and its directors/officer had actively suppressed certain material information and facts in the red herring prospectus fi led at the time of the Company's IPO. It further alleged that the suppression of material information resulted in the violation of certain provisions of the erstwhile DIP Guidelines, read with Regulation 111 of the SEBI ICDR Regulations, Section 11 of the SEBI Act and the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003.

The adjudicating officer, SEBI, on February 26, 2015 imposed penalty of Rs. 26 crore under Sections 15HA and 15HB of the SEBI Act on the Company. Further, penalty of Rs. 26 crore under Sections 15HA and 15HB of SEBI Act was imposed on some of its directors and officer to be paid jointly and severally. The Company, its directors and officer filed appeals before SAT. As per the SAT order dated April 15, 2015, SEBI undertook not to enforce its order dated February 26, 2015 until the next hearing.

(d) Disallowance of SEZ profits u/s 80IAB of the Income-tax Act, 1961 were made by the Income Tax Authorities in the assessment of the Company raising demands amounting to Rs. 73.09 crore, Rs. 72.85 crore, Rs. 355.24 crore and Rs. 487.23 crore for the assessment year(s) 2011-12, 2010-11, 2009-10 and 2008-09 respectively.

The Company had filed appeals before the appropriate appellate authorities against these demands for the said assessment years. In certain cases partial/full relief has been granted by the Appellate Authorities (CIT Appeal & Income Tax Appellate Tribunal). The Company and Income Tax Department have further preferred appeals before the higher authorities in those cases.

Based on the advice from independent tax experts and the development on the appeals, the management is confident that additional tax so demanded will not be sustained on completion of the appellate proceedings and accordingly, pending the decision by the appellate authorities, no provision has been made in the financial statements.

(e) The petitions were filed before the Hon'ble Punjab & Haryana High Court challenging the action of the Haryana Government to acquire the land belonging to Gram Panchayat of village Wazirabad, District Gurgaon for public purpose and thereafter selling the same to the Company, seeking directions from the court for quashing of the acquisition proceedings under Section 4 & 6 dated August 8, 2003 and January 20, 2004.

The Petitioners therein also sought quashing of the award dated January 19, 2006 and the regular letter of allotment (RLA) dated February 9, 2010 issued in favour of the Company for 350.715 acres of land.

The Hon'ble Punjab & Haryana High Court, vide its fi nal order dated September 3, 2014, while upholding the acquisition of land has however disapproved the allotment in favour of the Company. The Hon'ble High Court passed an order to keep the RLA dated February 9, 2010 issued in favour of the Company in abeyance and further directed the Haryana State Industrial and Infrastructure Development Corporation ('HSIIDC') to initiate fresh allotment process for higher returns in respect of the land in question with an option to State to revive the RLA in case no better bid is quoted by the public at large.

The Company has filed Special Leave Petition before the Hon'ble Supreme Court of India challenging the judgment dated September 3, 2014 passed by the Hon'ble Punjab & Haryana High Court. The Hon'ble Supreme Court of India issued notice to the Respondents and directed status quo to be maintained by the parties.

(f) The Hon'ble Supreme Court in the case of L&T on September 26, 2013, has upheld the decision given in case of M/s K. Raheja in 2005 that any agreement with prospective buyers prior to completion of construction will be treated as a Works Contract. Karnataka & Maharashtra State(s) had amended their respective VAT Acts after the decision of K. Raheja's case in 2005 and Delhi has amended the VAT Act vide notification issued on September 20, 2013 and Haryana has also amended the VAT Act vide notification issued on August 12, 2014 & amnesty enabling provision has been notifi ed on November 5, 2014 for the period prior to March 31, 2014. Except from the state of Kerala, Haryana and Punjab, the Company/group has not received any show cause/assessment notice from any of the states where the projects are located with respect to additional VAT liability in this regard. Further, the Company has filed an intervention application before Hon'ble Supreme Court of India in the matter of Larsen & Toubro Ltd v/s State of Karnataka Civil Appeal No. 8672 of 2013.

Moreover based on the terms of the agreement with the buyers, management is of the opinion that in case the tax would be imposed by VAT authorities or already been imposed, as the case may be, the same is recoverable from the respective buyers and where ultimate collection from customers is doubtful, as an abundant caution, adequate provision for the same has been made in the standalone financial statements.

Vigil Mechanism

The Company has a vigil mechanism in the form of Whistle Blower Policy in line with listing agreement to deal with instances of unethical and/or improper conduct and actioning suitable steps to investigate and correct the same. The details of the Whistle Blower Policy are in the Corporate Governance Report and also posted on the website of the Company.

Accolades

The details of Recognitions, Awards and Accolades received during the year are at Annexure-F.

Acknowledgements

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. The hard work and unstinting efforts of the employees have enabled the Company to sustain and further consolidate its position in the industry.

Your Company continues to occupy a place of respect among 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 and State Government authorities, customers and other business associates, who have extended their valuable and sustained support and encouragement during the year under review. It will be the Company's endeavour to build and nurture these strong links with its stakeholders.

For and on behalf of the Board of Directors

(Dr. K.P. Singh)

Chairman

May 20, 2015 (DIN 00003191)




Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting their 49th Report on the business and operations of the Company together with the audited results for the financial year ended 31st March, 2014.

Consolidated Financial Results

(Rs. in crore)

2013-14 2012-13

Consolidated Revenue/Turnover 9,789.59 9,095.74

Gross Operating Profit 3,976.79 3,949.11

Less: Finance Charges 2,463.25 2,314.04

Less: Depreciation 662.93 796.24

Profit before Tax 850.61 838.83

Exceptional items 329.86 32.96

Less: Provision for Tax (83.63) 125.11

Profit before minority interest and share 604.38 680.76 of profit in associates

Share of Profit in associates (net) 7.08 4.13

Minority interest 56.54 44.50

Profit after exceptional items, tax, minority interest, share of profit in associates and 668.00 729.39 before prior period items

Prior period items (21.79) (17.47)

Net Profit 646.21 711.92

In FY''14, your Company reported consolidated revenues ofRs. 9,790 crore, an increase of 8% over Rs. 9,096 crore in FY''13. EBIDTA stood at Rs. 3,977 crore, an increase of 1% from Rs. 3,949 crore in the previous year. Net profit after tax, minority interest and prior period items was at Rs. 646 crore, a decline of 9% from Rs. 712 crore. The EPS for FY''14 stood at Rs. 3.65 as compared to Rs. 4.19 for FY''13.

The cost of revenues including cost of land, plots, development rights, constructed properties and others increased to Rs. 3,880 crore as against Rs. 3,356 crore in FY''13. Staff costs decreased marginally to Rs. 576 crore versus Rs. 596 crore. Depreciation, amortization and impairment charges were at Rs. 663 crore versus Rs. 796 crore in FY''13. Finance costs increased to Rs. 2,463 crore from Rs. 2,314 crore in FY''13. The overall debt witnessed a significant decrease; however the increase in cost of borrowing impacted the finance costs.

Review of Operations

Your Company''s Balance Sheet as at 31st March, 2014 reflected a healthy position with a net worth of Rs. 29,194 crore. The net worth of your Company witnessed an increase of Rs. 1,666 crore from FY''13.

Net debt was Rs. 18,526 crore as compared to Rs. 21,731 crore as of 31st March, 2013. The net debt to equity ratio was at 0.64.

During the year, the credit rating of your Company improved, with outlook changing from negative to stable.

The year 2013-14 proved to be difficult for the real estate sector mainly due to poor macro-economic conditions, slowing income growth, continuing high borrowing costs both for industry and the consumer and the rising inflation.

Your Company completed approximately 4.26 msf of commercial and residential projects in FY''14 while adding approximately 9.76 msf to new construction. As a result, the total area under construction was 59 msf as on 31st March, 2014.This includes approximately 10.06 msf of saleable area pursuant to certain joint venture arrangements. Handover of 4.26 msf were commenced across the cities comprising plots, commercial complexes and commercial offices.

The development business comprising primarily the residential segment, followed by commercial complexes has a combined area of 55.51 msf under construction as of 31st March, 2014.

The rental business has approximately 2.81 msf of area under construction as of 31st March, 2014.

Your Company''s aggregate net debt amounted to Rs. 18,526 crore as of 31st March 2014. On account of lack of any significant reductions in bank rates by RBI, your Company''s average cost of debt has continued to range between 12.5% and 13% in FY''14. Your Company believes that its present level of debt is comfortable even as it will strive to reduce them further over the medium term. Your Company realized proceeds of approximately Rs. 4,067 crore during FY''14 from the divestment of non-core assets and businesses. Your Company intends that any capital expenditure to be incurred in the financial year 2014-15 shall be met through selective divestitures and target to maintain the net debt at the similar levels, even though there may be some intra year variations.

Your Company met all stakeholder commitments in time during the year, including those to the lending institutions despite tight liquidity conditions.

The performance of the Company on standalone basis for the year ended 31st March, 2014 is as under:

Standalone

(Rs. in crore)

2013-14 2012-13

Turnover 3,825.88 3,304.84

Gross Operating Profit 2,673.44 2,544.31

Less: Finance Charges 1,666.81 1,709.89

Less: Depreciation 77.98 141.89

Profit before exceptional items, tax and 928.65 692.53 prior period items

Exceptional items (net) (390.16) -

Less: Provision for Tax 8.82 175.86

Profit after Tax 529.67 516.67

Prior-period items (net) 2.83 (15.10)

Net Profit 526.84 501.57

Future Outlook

Your Company plans to primarily focus on the development of luxury and premium residential projects in certain key locations in India such as the cities of Delhi, Gurgaon, Mumbai, the Chandigarh Tri-City and certain areas in and around Chennai and Bengaluru. In addition, your Company also intends to continue with the development and sale of its existing projects at several locations in India including Lucknow, Indore, Kochi, Kolkata and other cities.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 2 per equity share (100%) (previous year Rs. 2 per equity share) for the FY''14 amounting to Rs. 356.29 crore (previous year Rs. 356.09 crore), subject to approval of the members.

The Company proposes to transfer 10% of standalone net profit amounting to Rs. 52.68 crore to general reserve.

Changes in Share Capital Issue of Shares under IPP & ESOP

During the year under review, the Company has issued and allotted 8,10,18,417 equity shares of face value of Rs. 2 each at an issue price of Rs. 230 per share, aggregating to Rs. 1,863.42 crore through Institutional Placement Programme (IPP) and also allotted 17,13,813 equity shares of Rs. 2 each fully paid upon exercise of stock options by the eligible employees under the Employee Stock Option Scheme, 2006 thereby increasing the paid-up share capital byRs. 16.55 crore.

Corporate Sustainability & Business Responsibility Report

Your Company''s social sustainability initiatives encompassing skill development, education and health are targeted at the underserved sections of society and towards inclusive growth. In addition, your Company, from the design and through construction stages strives for the most environment friendly technologies.

SEBI vide its circular no. CIR/CFD/DIL/8/2012 dated August 13, 2012, has mandated top 100 companies, based on market capitalization at BSE and NSE to include Business Responsibility Report (BRR) as part of the Annual Report. However, as a green initiative, the Company has hosted the said report on the website www.dlf.in. The said report shall be made available to any member of the Company, upon request to the Company Secretary at the Registered Office of the Company. The BRR describes the initiatives taken by the Company from social, environmental and governance perspectives.

Credit Rating

ICRA has reaffirmed rating of [ICRA] A for Rs. 4,000 crore - NCD programme. It has also reaffirmed rating at [ICRA] A for Rs. 11,329 crore line of Credit (Term Loan Rs. 7,589 crore, Fund Based Limits Rs. 2,580 crore and Non-fund Based Limits Rs. 1,160 crore).

CRISIL has reaffirmed rating of "CRISIL A" for Rs. 5,000 crore NCD Programme. Further, for total bank loan facilities ofRs. 15,730 crore, it has assigned "CRISIL A/Stable" for Long Term facilities and "CRISIL A2 " for Short Term facilities.

Fixed Deposits

The Company has not accepted/renewed any public deposits during the year under review.

Development in Subsidiaries

During the year under review, as a part of DLF''s objective of divesting its non core assets, the following divestment took place -

DLF Global Hospitality Limited, a wholy-owned subsidiary has divested its entire stake in Silverlink Resorts Limited (SRL) at an enterprise value of US $358 million, accordingly, SRL ceased to be a subsidiary of the Company.

The Company has sold its entire stake of 74% in the insurance joint venture with Prudential International Insurance Holdings Limited to Dewan Housing Finance Corporation Limited & its group entities.

DLF Home Developers Limited and DLF Projects Limited, wholly-owned subsidiaries have divested their entire 60% stake in Star Alubuild Private Limited, a company specializing in designing, engineering, fabrication and installation of curtain walls for commercial buildings, retail malls, doors and windows for projects, at an enterprise value of Rs. 79.80 crore.

During the year under review, the Company along with it''s subsidiary has transferred undertaking(s) comprising wind turbines situated at Gujarat, Tamilnadu, Rajasthan and Karnataka, aggregating to Rs. 607.79 crore.

DLF Home Developers Limited, a wholly-owned subsidiary has sold its entire stake in Galaxy Mercantiles Limited a JV Company.

Subsidiary Companies and Consolidated Financial Statements

The consolidated financial statements of the Company and its subsidiaries, prepared in accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India (ICAI), form part of the Annual Report. In terms of the Circular No.2/ 2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit & Loss and other documents of the subsidiary companies are not required to be attached with the Balance Sheet of the Company. The Company will provide a copy of separate annual accounts in respect of each of its subsidiary to any shareholder of the Company who asks for it and the said annual accounts will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiaries.

The Company has appointed Independent Director in its material non-listed subsidiaries in compliance with the provisions of listing agreement with stock exchanges.

As on 31st March, 2014, the Company has 143 subsidiaries in terms of the Accounting Standards issued by ICAI and the financial details of such subsidiaries form part of the Annual Report.

Events after Balance Sheet Date

a) COMPAT in its judgment has upheld certain findings of the earlier orders of CCI. The Company is in the process of examining the Order and seeking legal opinion. The Company shall be challenging the above said judgment in the Hon''ble Supreme Court within the time frame allowed to it.

b) DLF Emporio Limited, a group company successfully issued India''s first Commercial Mortgage Backed Security (CMBS) of Rs. 525 crore, with a legal maturity of 7.5 years. DLF Emporio owns and operates approximately 3 lac sq. ft. of a Luxury Mall in New Delhi, India. The CMBS issue was rated CRISIL AA (SO) and listed at BSE.

This was a landmark issuance, being the first of its kind in the country at a competitive pricing. This shall pave way for more such issuances in future.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-A 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, as amended, the names and other particulars of the employees are set out in the annexure to the Directors'' Report. However, having regard to 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 (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is at Annexure-B.

The certificate, as required under Clause 14 of the said Guidelines and as obtained from the Statutory Auditors with respect to the implementation of the Company''s Employee Stock Option Scheme, 2006, shall be placed at the forthcoming Annual General Meeting.

Listing at Stock Exchanges

The equity shares of your Company are listed on NSE and BSE (the stock exchanges). The non- convertible debentures issued by your Company are also listed on the Wholesale Debt Market (WDM) segment of NSE. The listing and custody fees for the year 2014-15 have been paid to the stock exchanges and Depository(ies), respectively.

Pursuant to Clause 5A of the listing agreement, the Company has opened two separate suspense accounts for shares held in dematerialised and physical form which remain unclaimed, the details of which are mentioned in the Corporate Governance Report.

Management Discussion & 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 Corporate Governance Report, as stipulated under Clause 49 of the listing agreement, forms part of this Report.

The requisite certificate from the Statutory Auditors of the Company, Walker Chandiok & Co LLP, Chartered Accountants, confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to Corporate Governance 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 and there are no material departures;

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 profits of your Company for the year ended on 31st March, 2014;

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, Walker Chandiok & Co LLP (formerly Walker, Chandiok & Co), Chartered Accountants, hold office until the conclusion of the forthcoming Annual General Meeting and are eligible 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 141(3)(g) of the Companies Act, 2013 and they are not disqualified for re-appointment.

Auditors'' Report

(i) The observation given in point no. 7 of the Auditor''s Report on Standalone Financial Statements read with note no. 50 of Schedule to the Standalone Financial Statements, are self-explanatory and do not call for any further comments.

(ii) The observation given in point no. 7 of the Auditor''s Report on Consolidated Financial Statements read with note no. 38 of Schedule to the Consolidated Financial statements are self-explanatory and do not call for any further comments.

Cost Auditors

The Cost Audit Report for FY 2013-14 pertaining to generation, transformation/transmission/ distribution of electricity produced through wind power, shall be filed by the Cost Auditor - M/s. R.J. Goel & Co., Cost Accountants in due course.

Directors

Pursuant to Section 161 of the Companies Act, 2013 read with Article 101(2) of Articles of Association of the Company, Mr. Pramod Bhasin and

Mr. Rajiv Krishan Luthra were appointed as Additional Directors on 12th August, 2013. Similarly, Mr. Ved Kumar Jain, Mr. Mohit Gujral and Mr. Rajeev Talwar were appointed as Additional Directors on 14th February, 2014.

Mr. Gujral and Mr. Talwar were appointed as Whole-time Director(s) of the Company with effect from 14th February, 2014 and their appointments were approved by the Shareholders.

All the above Directors shall hold office upto the date of 49th Annual General Meeting of the Company.

The Company has received requisite notice(s) from the member(s) proposing the candidatures of Mr. Mohit Gujral and Mr. Rajeev Talwar for appointment as Director(s), liable to retire by rotation and also for Mr. Pramod Bhasin, Mr. Rajiv Krishan Luthra and Mr. Ved Kumar Jain, as Independent Director(s).

Pursuant to Section 152 of the Companies Act, 2013 read with Clause 102 of the Articles of Association of your Company, Mr. G.S.Talwar and Ms. Pia Singh, Directors, liable to retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re- appointment.

The Company has received requisite notice(s) from the member(s) proposing the candidatures of Mr. K.N. Memani, Dr. D.V. Kapur and Mr. B. Bhushan, as Independent Director(s).

Pursuant to the provisions of Section 149, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modifications or re-enactment thereof for the time being in force) and Clause 49 of the listing agreement, the Independent Director proposed to be appointed shall hold office for 5 (five) consecutive years for a term upto 31st March, 2019. The Company has received declarations from all the Independent Directors confirming that each of them meets the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Clause 49 of the listing agreement.

Brief resume of Directors seeking appointment/ re-appointment along with other details as stipulated under Clause 49 of the listing agreement, are provided in the Notice for convening the Annual General Meeting.

Corporate Social Responsibility

The Company has made significant investments in community welfare initiatives for the underprivileged through education, training, health, environment, capacity building and rural- centric interventions through its Foundation and other Trusts. The details of CSR activities undertaken are at Annexure-C. The employees of the Company also participated in many of such initiatives. During the year under review, the Company has contributed to the extent of Rs. 3,569.43 lac towards CSR activities.

The Company has also constituted Corporate Social Responsibility Committee, details of which are mentioned in the Corporate Governance Report.

Environment Policy

The Company has over the years, gone beyond the requirements of law in improving the environment in the ecosystem that it operates in and it has formalised and adopted a Corporate Environment Policy which is available on the website of the Company - www.dlf.in.

Awards

The details of Awards and Accolades received during the year are at Annexure - D.

Acknowledgements

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. The hard work and unstinting efforts of the employees have enabled the Company to sustain and further consolidate its position in the industry.

Your Company continues to occupy a place of respect among 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 and State Government authorities, customers and other business associates, who have extended their valuable and sustained support and encouragement during the year under review. It will be the Company''s endeavour to build and nurture these strong links with its stakeholders.

For and on behalf of the Board of Directors

(Dr. K.P. Singh)

Chairman May 29, 2014 (DIN 00003191)


Mar 31, 2013

The Directors have pleasure in presenting their 48th Report on the business and operations of the Company together with the audited results for the financial year ended 31st March, 2013.

Consolidated Financial Results

(Rs. in crore) 2012-13 2011-12

Consolidated Revenue /Turnover 9,095.74 10,223.85

Gross Operating Profit 3,949.11 4,498.79

Less: Finance Charges 2,314.04 2,246.48

Less: Depreciation 796.24 688.83

Profit before Tax 838.83 1,563.48

Exceptional items 32.96 15.98

Less: Provision for Tax 125.11 369.35

Profit before minority interest 680.76 1,178.15

Share of Profit/(loss) in associates 4.13 (1.50)

Minority interest 44.50 33.64

Profit after Tax, minority interest and 729.39 1,210.29 before prior period items

Prior period items (17.47) (9.47)

Net Profit 711.92 1,200.82

Your Company recorded consolidated revenues of Rs. 9,095.74 crore in FY''13 as compared to Rs. 10,223.85 crore in FY''12, a decrease of 11%. The gross operating profit, on consolidated basis, decreased to Rs. 3,949.11 crore from Rs. 4,498.79 crore, a decrease of 12%. The profit after tax, minority interest and prior period items was Rs. 711.92 crore as compared to Rs. 1,200.82 crore for the previous year, a decrease of 41%.

The reasons for the above decrease were primarily due to lower operating margin because of lower sales, increase in construction costs and higher depreciation coupled with continuing high interest costs. The sales / margin reported were also impacted due to the new Guidance Note on Accounting for Real Estate transaction issued by ICAI for all projects launched on or after 1st April, 2012.

Review of Operations

The year under review was a sluggish year in terms of economic growth, largely because of high interest rates, inflation, lower GDP growth impacting sentiments and investor interest across businesses.

Your Company booked gross sales of approximately 7.23 msf of residential and commercial space across different geographies valued at Rs. 3,815 crore. The Company has launched 4.27 msf and delivered 12.4 msf during the year.

The Company''s launches in the residential segment comprised a well balanced product mix of premium homes and plotted development and received a good response.

In the rental business, your Company contracted additional leasing of 1.14 msf during the year, taking the total leased space to approximately 23.82 msf across commercial offices and retail malls.

Your Company unlocked Rs. 3,160 crore during the year by divesting certain non-core and non-strategic assets.

Your Company met all stakeholder commitments in time during the year, including those to the lending institutions despite tight liquidity conditions.

The performance of the Company on standalone basis for the year ended 31st March, 2013 is as under :

Standalone

(Rs. in crore)

2012-13 2011-12

Turnover 3,304.84 4,582.67

Gross Operating Profit 2,544.31 3,201.33

Less: Finance Charges 1,709.89 1,553.78

Less: Depreciation 141.89 139.84

Profit before Tax 692.53 1,507.71

Less: Provision for Tax 175.86 458.77

Profit after Tax 516.67 1,048.94

Prior-period items (net) (15.11) (7.15)

Net Profit 501.56 1,041.79

Future Outlook

Your Company expects sluggish economic and business environment to continue to be challenging for the next few quarters. The Company shall continue to focus on luxury premium housing, timely execution and delivery of its projects, divestment of residual non-core assets and cash conservation. The development business is expected to have a healthy launch pipeline in the coming year. The rental business is expected to sustain moderate momentum for future leasing. The Company''s emphasis will be on cash flow maximization.

Your Company expects to continue its targeted divestment of non-core assets.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 2 per equity share (100%) (previous year - Rs. 2 per equity share) for the FY''13 amounting to Rs. 355.95 crore (previous year Rs. 339.67 crore) for approval of the members.

Your Company proposes to transfer Rs. 50.16 crore to general reserve.

Changes in Capital Structure

Issue of Equity Shares under IPP. In May, 2013, the Company has issued 8,10,18,417 equity shares of face value of Rs. 2 each at an issue price of Rs. 230 per share, aggregating to Rs. 1,863.42 crore. The Issue was channelised through the Institutional Placement Programme (IPP) in terms of Chapter VIII-A of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 as amended, in order to achieve minimum public shareholding of 25%. Post issue, the paid-up share capital of the Company was increased by Rs. 16.20 crore.

Issue of Equity Shares under ESOP. During the year under review, your Company has allotted 3,33,358 equity shares of Rs. 2 each fully paid upon exercise of stock options by the eligible employees under the Employee Stock Options Scheme, 2006 thereby increasing the paid-up share capital by Rs. 0.07 crore.

Corporate Sustainability & Business Responsibility Report

Your Company''s social sustainability initiatives encompassing skill development, education and health are targeted at the underserved sections of society and towards inclusive growth. In addition, your Company, from the design and through construction stages strives for the most environment friendly technologies.

In compliance with Circular No.CIR/CFD/ DIL/8/2012 dated 13th August, 2012, wherein SEBI has mandated top 100 companies, based on market capitalization at BSE and NSE to include Business Responsibility Report as part of the Annual Report describing the initiatives taken by the Company from social, environmental and governance perspectives. However, as a green initiative, the Company has hosted the said report on the website www.dlf.in. The said report shall be made available to any member of the Company, upon request to the Company Secretary at the Registered Office of the Company.

Credit Rating

CRISIL has revised its outlook vide letter dated 23rd May, 2013 on long-term bank facilities of Rs. 12,215 crore and debt instruments Rs. 5,000 crore to ''Stable'' from ''Negative'', while reaffirming the rating at "CRISIL A" (pronounced "CRISIL A" rating). The rating on short-term facilities of Rs. 3,515 crore and debt programme of Rs. 3,000 crore have been reaffirmed at "CRISIL A2 ".

ICRA has reaffirmed the rating of NCD programme of Rs. 4,000 crore and Rs. 12,754 crore line of credit at [ICRA] A (pronounced ICRA A) vide its letter dated 2nd April, 2013.

Fixed Deposits

The Company has not accepted/renewed any public deposits during the year under review.

Subsidiary Companies and Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with applicable accounting standards, issued by the Institute of Chartered Accountants of India, form part of the Annual Report. In terms of the Circular No.2/ 2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Board of Directors has, at its meeting held on 30th May, 2013 passed a resolution giving consent for not attaching the Balance Sheet, Statement of Profit & Loss and other documents of the subsidiary companies. The required information on subsidiary companies is given in this Annual Report. The said documents/ details shall be made available, upon request, to any member and will also be made available for inspection by any member at the registered office of the Company during working hours up to the date of the Annual General Meeting.

The Company has appointed Independent Director(s) in its material non-listed subsidiaries in compliance with the provisions of listing agreement with stock exchanges.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-A 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, as amended, 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 (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 is provided at Annexure-B.

The certificate, as required under Clause 14 of the said Guidelines, and as obtained from the Statutory Auditors with respect to the implementation of the Company''s Employee Stock Option Scheme, 2006, shall be placed at the forthcoming Annual General Meeting.

Listing at Stock Exchanges

The equity shares of your Company including fresh issue of 8,10,18,417 shares issued under IPP to achieve minimum public shareholding, are listed on NSE and BSE (the stock exchanges). The non- convertible debentures issued by your Company are also listed on the Wholesale Debt Market (WDM) segment of NSE. The listing and custody fee for the FY 2013-14 have been paid to the stock exchanges, NSDL & CDSL, respectively.

Pursuant to Clause 5A of the Listing Agreement, the Company has opened two separate suspense accounts for shares issued in dematerialised and physical form which remain unclaimed. As on 31st March, 2013, 4,970 dematerialised equity shares and 3,73,693 physical equity shares were lying unclaimed.

Management Discussion & 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 Corporate Governance Report, as stipulated under Clause 49 of the listing agreement, forms part of this Report.

The requisite certificate from the Statutory Auditors of the Company, M/s. Walker, Chandiok & Co, Chartered Accountants, confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to Corporate Governance 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 and there are no material departures;

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 profits of your Company for the 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 eligible 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(1 B) of the Companies Act, 1956 and they are not disqualified for re-appointment within the meaning of Section 226 of the said Act.

Auditors'' Report

The observation given in point no. 6 of the Auditors'' Report on Consolidated Financial Statements read with note no. 38 of the Consolidated Financial Statements are self-explanatory and do not call for any further comments.

Cost Auditors

The Company has appointed M/s. R. J. Goel & Co., Cost Accountants in compliance with Cost Accounting Records (Electricity Industry) Rules, 2011 for its wind power generation business. The Cost Audit Report for FY 2012-13 shall be filed by the Cost Auditor in due course.

Directors

Pursuant to Section 256 of the Companies Act, 1956 read with the Clause 102 of the Articles of Association of the Company, Brig. (Retd.) N. P. Singh, Mr. B. Bhushan and Mr. K. N. Memani,

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 and other details as stipulated under Clause 49 of the listing agreement, 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 the underprivileged 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.

Acknowledgements

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. The hard work and unstinting efforts of the employees have enabled the Company to sustain and further consolidate its position in the industry.

Your Company continues to occupy a place of respect among 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 and State Government authorities, customers and other business associates, who have extended their valuable and sustained support and encouragement during the year under review. It will be the Company''s endeavour to build and nurture these strong links with its stakeholders.

For and on behalf of the Board of Directors

(Dr. K.P. Singh)

May 30, 2013 Chairman


Mar 31, 2012

The Directors have pleasure in presenting their 47th Report on the business and operations of the Company together with the audited results for the financial year ended 31st March, 2012.

Consolidated Financial Results

(Rs. in Crores)

2011-12 2010-11

Gross Operating Profit 4,498.79 4,336.54

Less: Finance Charges 2,246.48 1,705.62

Less: Depreciation 688.83 630.72

Profit before Tax 1,563.48 2,000.20

Less: Provision for Tax 369.35 459.41

Profit before minority interest 1,178.15 1,540.79

Share of Profit/(loss) in associates (1.50) 8.83

Minority interest 33.64 (7.24)

Profit after exceptional items, tax, 1,210.29 1,542.38 minority interest and before prior period items

Prior period items (9.47) 97.23

Net Profit 1,200.82 1,639.61

Your Company recorded consolidated revenues of Rs. 10,224 Crores in FY'12 as compared to Rs. 10,144 Crores in FY'11, an increase of 1%. The gross operating profit, on consolidated basis, improved to Rs. 4,498.79 Crores from Rs. 4,336.54 Crores, an increase of 4%. The profit after tax, minority interest and prior period items was Rs. 1,200.82 Crores as compared to Rs. 1,639.61 Crores for the previous year, a decline of 27%.

Your Company's profits were adversely impacted due to higher input cost with higher constructions costs due to continuing high inflation.

Review of Operations

Your Company booked gross sales of approximately 13.5 msf of residential and commercial offices/ complexes valued at Rs. 5,278 Crores. The average realisation declined to Rs. 3,900 psf on account of plotted launches with lower unit sales value in Lucknow and Hyderabad.

The Company's launches in the residential segment comprised a well balanced product mix of premium homes and plotted development and received a very good response.

In the rental business, your Company contracted additional leasing of 1.41 msf of property during the year, taking the total leased out space to approximately 22.66 msf across commercial offices and retail malls.

Your Company unlocked Rs. 1,774 Crores during the year by divesting certain non-core assets. Your Company met all stakeholders commitments in time during the year, including those to the lending institutions despite tight liquidity conditions.

The performance of the Company on a standalone basis for the year ended 31st March, 2012 is as under:

Standalone Financial Results

(Rs. in Crores)

2011-12 2010-11

Turnover 4,582.67 4,158.76

Gross Operating Profit 3,201.33 2,971.68

Less: Finance Charges 1,553.78 1,286.70

Less: Depreciation 139.84 129.77

Profit before Tax 1,507.71 1,555.21

Less: Provision for Tax 458.77 309.05

Profit after Tax 1,048.94 1,246.16

Prior period items (7.15) 23.42

Net Profit 1,041.79 1,269.58

Future Outlook

Your Company expects the current economic and business environment to stay challenging over the next few quarters. The Company shall continue to focus on plotted development, luxury/premium housing, to improve the cash cycle, timely execution and delivery of its projects, divestment of non-core assets and cash conservation.

The development side of the business is expected to have planned launches and sales of 10-12 msf. The rental business will target leasing of 2 msf in the current fiscal.

Your Company has targeted divestment of non-core assets to the extent of Rs. 5,000 - Rs. 6,000 Crores and achieve reduction in net debt by a similar amount in the current fiscal.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 2 per equity share (100%) (previous year - Rs. 2 per equity share) for the FY'12 amounting to Rs. 339.67 Crores (previous year - Rs. 339.51 Crores) for approval of the Members.

Corporate Sustainability

Your Company's social sustainability initiatives encompassing skill development, education and health are targeted at the weaker sections of society with your Company making contributions to inclusive growth. In addition, your Company right from the design and through construction stages, strives for the most environment friendly technologies.

Credit Rating

During the year under review-

CARE had assigned a short-term rating to DLF with a symbol PR1 for an amount of Rs. 1,500 Crores. As there were no short-term instruments outstanding, the Company requested CARE to withdraw the rating vide its letter dated 11.02.2012 and the same was withdrawn by CARE vide its letter dated 31.3.2012.

ICRA has assigned long-term rating of "[ICRA]A" (pronounced ICRA A) to the Rs. 4,000 Crores NCDs programme, and Rs. 12,832 Crores Line of Credit (Rs. 11,056 Crores fund based facilities and Rs. 1,776 Crores non-fund based facilities) vide letter dated 20th and 22nd March, 2012 respectively.

CRISIL has downgraded its ratings on the debt programmes and bank facilities to 'CRISIL A/ Negative (long-term) and CRISIL A2 (short-term)' vide its letter dated 28th December, 2011 from the earlier rating of 'CRISIL A /Stable and CRISIL A1' for the Company's Rs. 5,000 Crores non-convertible debentures and Rs. 3,000 Crores Short Term Debt Programme Rs. 12,000 Crores term loans/overdraft facilities, Rs. 3,670 Crores Short Term Loan, Bank Guarantee and Letter of Credit Bank facilities.

Fixed Deposits

The Company has not accepted/renewed any public deposits during the year under review.

Subsidiary Companies and Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its subsidiaries, prepared in accordance with applicable accounting standards issued by the Institute of Chartered Accountants of India, form part of the Annual Report. In terms of the Circular No.2/ 2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Board of Directors has, at its meeting held on 30th May, 2012 passed a resolution giving consent for not attaching the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiry companies. The required information on subsidiary companies is given in this Annual Report. The said documents/details shall be made available, upon request, to any Member of the Company and will also be made available for inspection by any Member of the Company at the registered office of the Company during working hours on business days.

The Company has appointed Independent Directors in its material non-listed subsidiaries in compliance with the provisions of Listing Agreement with stock exchanges.

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 the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 are given at Annexure-A 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, as amended, 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.

Employees Stock Option Scheme (ESOS)

During the year under review, your Company has allotted 8,13,925 equity shares of Rs. 2 each fully paid upon exercise of stock options by the eligible employees under the Employees Stock Options Scheme, 2006 thereby increasing the paid-up share capital by Rs. 16,27,850.

Information in terms of Clause 12 of the SEBI (Employees' Stock Option Scheme and Employees' Stock Purchase Scheme) Guidelines, 1999 is provided at Annexure-B.

The certificate, as required under Clause 14 of the said Guidelines, and as obtained from the Statutory Auditors with respect to the implementation of the Company's Employees Stock Option Scheme, 2006 shall be placed at the forthcoming Annual General Meeting.

Listing at Stock Exchanges

The equity shares of your Company are listed on NSE and BSE. The non-convertible debentures issued by your Company are also listed on the Wholesale Debt Market (WDM) segment of NSE. The listing and custodial fee for the financial year 2012-13 have been paid to the stock exchanges, NSDL / CDSL, respectively.

Pursuant to Clause 5A of the Listing Agreement, the Company has opened demat suspense accounts for shares issued in dematerialised and physical form, which remain unclaimed. As on 31st March, 2012, 5,330 equity shares in dematerialised form and 4,58,093 equity shares in physical form were lying unclaimed.

Management Discussion & 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 Corporate Governance Report, as stipulated under Clause 49 of the listing agreement with stock exchanges, forms part of this Report.

The requisite certificate from the Statutory Auditors of the Company, M/s. Walker, Chandiok & Co, Chartered Accountants, confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Clause 49, is attached to Corporate Governance 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 and there are no material departures;

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 profits of your Company for the 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 eligible 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(1 B) of the Companies Act, 1956 and they are not disqualified for re-appointment within the meaning of Section 226 of the said Act.

Auditors' Report

(i) The observation given in point no. 4 of the Auditors' Report on Standalone Financials read with Note No. 49 is self-explanatory and do not call for any further comments.

(ii) The observation given in point nos. 4 and 5 of the Auditors' Report on Consolidated Financials read with Note Nos. 38 and 39 are self-explanatory and do not call for any further comments.

Cost Auditors

The Company has appointed Cost Auditors - M/s. Vandana Bansal & Associates, Cost Accountants in compliance with Cost Accounting Records (Electricity Industry) Rules, 2011 for its Wind Power Generation division. The Cost Audit Report shall be filed by the Cost Auditors in due course for the FY 2011-12.

Directors

Pursuant to Section 256 of the Companies Act, 1956 read with the Clause 102 of the Articles of Association of the Company, Dr. D. V. Kapur and Mr. Rajiv Singh Directors retire by rotation at the ensuing Annual General Meeting and being eligible, have offered themselves for re-appointment.

Mr. M. M. Sabharwal, a Director of the Company who retires by rotation at the ensuing Annual General Meeting has conveyed his desire not to offer himself for re-appointment.

Mr. K. Swarup, Group Executive Director (Legal) superannuated on 31st December, 2011 and simultaneously demitted the office of Director.

The Directors place on record their appreciation for the contribution made by Mr. Sabharwal and Mr. Swarup during their tenure as Directors of the Company.

Brief resume of the Directors proposed to be re- appointed and other details as stipulated under Clause 49 of the Listing Agreement, 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 the underprivileged sections of society 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.

Acknowledgements

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. The hard work and unstinting efforts of the employees have enabled the Company to sustain and further consolidate its position in the industry.

Your Company continues to occupy a place of respect among 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 and State Government authorities, customers and 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 these strong links with its stakeholders.

For and on behalf of the Board of Directors

New Delhi (Dr. K.P. Singh)

6th August, 2012 Chairman

 
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