DLF – CORPORATE GOVERNANCE

REPORT

Prepared By:

Prijit – 76
Bhushan – 58
Vishal – 99
Abhishek – 51
Manish – 69
EQUITABLE TREATMENT OF
SHAREHOLDERS
 The extent of disclosure of shareholding pattern – Above
Average
 The extent to which the majority shareholder acts in the
interest of minority shareholders and all other
stakeholders – Average
 The systems in place to detect and prevent insider
trading – High

Rating of this attribute – 4 / 10

COMPOSITION OF BOARD
 5 Executive Directors and 7 Nonexecutive Directors (6 of them
are Independent Directors)
Rating: Average
 Selection of the Board done by shareholders

Rating: Average
 Compensation of the Board approved by t shareholders.

Rating: Average
 Attendance at Board meetings in 2007-2008 (Board members
with attendance below 6 out of 7 board meetings: 4)
Rating: Below Average
FUNCTIONING OF BOARD
 Objective:
 Serve and protect the overall interests of stakeholders.

 Provides and evaluates the strategic directions of the

Company.
 Formulates and reviews management policies and
ensures their effectiveness.
 Top management manages the business of the Company
under the overall supervision and guidance of the Board.
Rating: Above Average
SUB-COMMITTEES
Functioning of the following Subcommittees:
 Audit committee

 Shareholders’/Investors’ Grievance Committee

 Finance Committee

 Corporate Governance Committee

 Compliance Committee

 Remuneration Committee

 Other Functional Committees

Rating: Average
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters
Shareholder •Return on Investments (ROI) =
20.2%
•Dividend Rate = 200% (including
interim dividend at 100%)
Remarks Rating
DLF’s balance sheet size High
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
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters Remarks Rating

Debtholder •Crisil Credit Rating •Strong Balance sheet to withstand Above

– AA downtimes and leverage opportunities Average
•Debt Protection (Net worth - Rs 196,883 mn; cash
Measures – Strong 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
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters Remarks Rating

Customer •Market Share – 15 to DLF is in the process of setting up Above

20% systems for customer management – Average
•Customer
Relationship •Capable of handling a huge integrated
Management – database that shall be used for auto
Effective 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
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters Remarks Rating

Employee •Employee Stock •Effective Employee Communication Below

Options: (Various channels to provide information Average
Granted – 4,042,134 and receive feedback, including
Committed – 991,876 fortnightly HR Newsletter-SAMPARK,
intranet (DLF Connect) and internal HR
•Employee Strength – helpline successfully launched)
Increased from 2478 last
year to 3700 •In the process of constituting an
Employee Welfare Trust to implement
•Labor Strength – various employee welfare schemes
1000
•Strengths partially offset by –
•Compensation – •Labors having to work in two
Reduction in extended shifts of 10 hours each,
Compensation Cost: to increase productivity
Rs. 6,49,64,533 •Reduction in compensation costs
Impact on Profits : (in spite of increase in employee
Increase by Rs. strength) to boost profits
4,28,83,088
(net of Income tax)
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters Remarks Rating

Supplier •Credit Terms / •Restrictive credit flows continue in the High

Supplier Relations – real estate sector
DLF has Joint Ventures
with several of its •To mitigate these factors, DLF has set
suppliers 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
VALUE CREATION FOR STAKEHOLDERS
Stakeholder Key Parameters Remarks Rating

Society •Corporate •CSR integrated into the Company’s Above

Citizenship / business strategy of Building India and Average
Social becoming the world’s most valued real estate
Responsibility 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
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.art
icle
.
 http://www.financialexpress.com/news/Sebi-to-be-cautio
us-in-clearing-DLF-IPO/89513/
 2008 Annual Report

 CRISIL Credit Rating – March 12, 2008