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DLF

BSE: 532868|NSE: DLF|ISIN: INE271C01023|SECTOR: Construction & Contracting - Real Estate
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Directors Report Year End : Mar '19    Mar 18

Directors’ Report

The Directors have pleasure in presenting their 54th Report on the business and operations of the Company, together with the audited results for the financial year ended 31 March 2019.

Financial and Operational Highlights

(Rs, in crore)

Consolidated

Standalone

2018-19

2017-18

2018-19

2017-18

Total Income from operations

9,029

7,664

3,709

3,804

Total expenses

8,511

7,814

2,943

3,138

Profit before exceptional items and tax

518

(150)

766

666

Exceptional

items(net)

127

8,765

-

(121)

Profit before tax

645

8,615

766

545

Less: Tax expense

277

4,323

78

180

Profit after tax

368

4,292

688

365

Share of Profit/ (Loss) in jointly controlled entities (net)

946

184

Net Profit for the year

1,314

4,476

688

365

Other Comprehensive Income

(3)

13

-

10

Total Comprehensive Income

1,311

4,489

688

375

Your Company recorded a consolidated revenue of Rs,9,029 crore in FY''19 as compared to Rs,7,664 crore in FY''18, an increase of 18%. The financials for the current year are not comparable on account of the following reasons:

(a) Revenue was recognized as per Ind AS 115 ''Revenue from contracts with customers'' during the year under review, whereas it was recognized based on the percentage of completion method (PoCM) in the preceding year;

(b) DLF Cyber City Developers Limited (DCCDL) Group was consolidated as a subsidiary till 25 December

2017 and as a joint venture in accordance with Ind AS 28 ''Investment in Associated and Joint Ventures'' for the remaining period of FY''18, whereas the DCCDL Group was consolidated as a joint venture for FY''19; and

(c) A one-time exceptional gain upon fair valuation of DCCDL was recorded in FY 2017-18.

Gross operating cash flow before interest and tax stood at Rs,1,605 crore while operating cash flow stood at Rs,390 crore for FY''19.

The earnings per share (EPS) for the year under review was Rs,7.38.

Your Company''s net worth as on 31 March 2019 stood at Rs,33,577 crore. The decrease was mainly attributed to the implementation of the new accounting standard, Ind AS 115, which resulted in opening reserves being adjusted by Rs,5,383 crore (net of taxes) and subsequently enhanced by Rs,3,173 crore following the placement of equity shares to Qualified Institutional Buyers (QIBs).

Your Company''s Balance Sheet was transformed following the infusion of Rs,12,173 crore of equity Rs,9,000 crore from the promoters and Rs,3,173 crore from QIBs. This resulted in a significant reduction in debt, resulting in a net debt-to-equity ratio of 0.13. The infusion of Rs,2,250 crore by the promoters following the exercise of warrants during FY 2019-20 would reduce the ratio further.

With the debt overhang behind it and following the completion of all legacy projects, your Company has enhanced its focus on generating free cash flows through the progressive monetization of its ready-to-occupy inventory.

In a challenging year, your Company achieved net sales of Rs,2,435 crore as against net sales of Rs,1,000 crore in the previous year. It completed 0.59 million square meter (msm) [6.3 million square feet (msf)] of projects during the year under review and issued possession letters to customers for 3,318 units aggregating 0.62 msm (6.64 msf) during FY''19.

DLF Cyber City Developers Limited (DCCDL)

DCCDL reported a consolidated revenue of Rs,5,088 crore compared to Rs,4,948 crore in the previous year. DCCDL Group''s consolidated EBIDTA of Rs,2,664 crore in FY''19 in comparison to Rs,3,541 crore in FY''18 and a profit after tax stood of Rs,1,399 crore compared to Rs,1,418 crore in FY''18. Your Company has a 66.67% equity stake in DCCDL.

Review of Operations

Your Company''s ready-to-occupy inventory across the country stood at Rs,11,650 crore, which your Company is monetising through a focused sales engine.

Your Company demonstrated its execution capabilities and addressed all customer commitments. The Company is now gearing towards the next cycle of development, planning to build out 1.58 msm (17 msf) of residential and commercial space in the near future. The Company''s land reserves are in strategic locations, acquired at historical costs and it is attractively placed to capitalize on improving market conditions by launching projects with speed and without the need to acquire land.

Development Business

Your Company commenced the construction of a new residential project at Midtown, Central Delhi, in a joint venture with GIC Real Estate, Singapore with a development potential of 0.18 msm (1.9 msf); the Company is in the midst of designing another project in that vicinity in a joint venture with GIC Real Estate, Singapore with a development potential of 0.56 msm (6 msf).

Your Company also commenced planning for 0.28 msm (3 msf) commercial building in Gurugram in a joint venture with Hines, USA. It commenced plans for a 0.23 msm (2.5 msf) residential project in DLF5, Gurugram.

Annuity Business

Your Company''s commercial leasing business continued to report good growth. Gross leasing achieved during the year stood at 0.61 msm (6.56 msf), out of which 0.52 msm (5.57 msf) was attributable to the DCCDL Group. Rental values continued to grow attractively. Over 0.17 msm (1.8 msf) of office space was re-leased following the expiry of its nine-year cycle, resetting rentals at the prevailing market rate.

Cyber Park, a 0.23 msm (2.5 msf) commercial office property in Gurugram, will begin to generate rentals from September 2019. Over 90% of the property has been pre-leased to marquee tenants. Another phase of IT SEZ, Chennai is nearing completion and rentals shall commence from the current fiscal year.

DLF''s strong portfolio of high-quality office and retail properties caters to more than 1,600 tenants, including a number of Fortune 500 companies. Your Company''s existing properties have set global benchmarks; the Company is endeavouring to graduate these benchmarks higher by setting new standards in its upcoming developments.

DLF embarked upon development of 0.28 msm (3 msf) of Commercial Office space to address emerging demand in Gurugram. The design for the project is underway. Your Company also commenced planning for the development of 0.33 msm (3.5 msf) commercial office space in Hyderabad and 0.37 msm (4 msf) of office space in Chennai.

DLF''s rigorous safety standards are vetted by world-class independent third parties like British Safety Council. DLF has championed the cause of sustainable development, adherence to global standards and created benchmarks in the Indian real estate sector through the creation of the highest LEED Platinum space in the country (2.53 msm) [27.25 msf] certified by the U.S. Green Building Council, the highest global sustainability certification agency.

DLF recently emerged as the first (and only) organization in the world to win 11 Sword of Honour awards conferred by the British Safety Council in a single year. This is widely recognized as the pinnacle of safety achievement in the real estate sector the world over.

The Indian office leasing market is expected to grow steadily on the back of robust economy activity and a growing recognition of India as a favorable investment destination due to improving infrastructure and fewer policy hurdles etc.

The Indian retail industry is passing through a transformation, comprising the employment of new technologies, new store formats, evolving business models and a greater provision for experiential retail environments. Retailers are preparing for a future marked by an extension beyond conventional retail formats in line with changing consumer preferences. In this emerging environment, lifestyle experience is expected to emerge as the key inflection point influencing the success of malls; with food, beverages and entertainment facilities will increase in importance. Besides, customer preferences have shifted towards branded developments of superior quality. Innovative developers are introducing new entertainment options in malls. Retailers are seeking to merge online experiences with offline ones to enhance the customer''s interest and involvement.

Other Businesses - Hotels

Your Company continues to own two hotel properties viz. The Lodhi, an iconic hotel property in New Delhi, which it directly manages, and Hilton Garden Inn, Saket, which is managed by the global major Hilton.

Transfer of Mall of India, Noida

In line with the Company''s stated objective of streamlining and consolidating the operations and holding structure of its rental assets, the Company transferred its property, Mall of India, Noida (MOIN), a retail mall located in Sector 18, Noida, with a leasable area of 0.19 msm (2 msf) (approximately) to Paliwal Real Estate Limited (Paliwal), a wholly-owned subsidiary. Subsequently, the Board of Directors approved the transfer of entire shareholding of the Company in Paliwal to DCCDL.

Dividend

The Directors are pleased to recommend a dividend of Rs,2/- per equity share (100%) on the face value of Rs,2/each for FY''19 on the enhanced share capital, payable to those shareholders, whose names appear in the Register of Members/ Beneficial ownership details provided by depositories on the record date. The total outgo on account of dividend (exclusive of tax on distributed profit) would absorb Rs,441.44 crore, against Rs,356.81 crore in the previous financial year. The total outgo would increase subsequent to the allotment of equity shares upon conversion of Compulsorily Convertible Debentures (CCDs) and the exercise of Warrants by the promoters/ promoters group entities, as the case may be.

The dividend payout is in accordance with the Company''s Dividend Distribution Policy. The policy was formulated by the Board pursuant to Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [Listing Regulations]. The policy is available on the website of the Company http:// www.dlf.in/images/downloads/170601162837_0001.pdf.

Reserves

The Company as per the provisions of the Companies (Share Capital and Debentures) Rules, 2014, as amended, has adequate Debenture Redemption Reserve (DRR).

The Board of Directors of your Company decided not to transfer any amount to the Reserves for the year under review.

Credit Rating

CRISIL reaffirmed Long-Term/ Non-convertible Debentures Rating A /Stable and Short-Term/ Short-Term Debt Rating of CRISIL A1.

ICRA reaffirmed its long-term rating at [ICRA]A (Positive) and the short-term rating at [ICRA]A1.

Investor Relations

Your Company strives to excel in its engagement with international and domestic investors and activated a feedback mechanism to measure its investor relation effectiveness. Your Company interacts periodically with the investor/ analyst community through structured conference calls and periodic investor/ analyst interactions, including one-on-one meetings, participation in investor conferences and quarterly earnings calls. Your Company hosted an analyst meet during the year under review, comprising a meeting of analysts and investors, with its senior management.

Real Estate (Regulation and Development) Act, 2016 (RERA)

Even as the Central Government had notified RERA in May 2016, certain States are yet to have operational websites. The regulation created short-term adjustment challenges but is expected to be beneficial for the sector. RERA is expected to enhance confidence among customers, increasing sectoral transparency and delivery discipline.

Your Company has applied for registration of the eligible projects under RERA with various State Governments.

Goods and Services Tax (GST)

The Company smoothly implemented the new tax structure under GST since its implementation with effect from 1 July 2017 and is complying with all periodic regulatory requirements, which are reviewed by an external expert independent agency.

Impact on the Development Business

With effect from 1 April 2019, a concessional GST rate of 5% (1% in case of affordable housing) was notified for the construction of Residential Real Estate Projects, without input tax credit. Various conditions were stipulated for the revised rate. For ''ongoing projects'', an option was provided to developers to opt for the new rate or continue at the retrospective rate (12% of the basic sale price and parking but with input tax credit). It was clarified that where the Occupation Certificate was received prior to 31 March 2019, the earlier rate would apply. For most of the ongoing projects of the Company, the Occupation Certificate was received before 31 March 2019 and hence, the 12% rate continued to apply to the extent of bookings made prior to receiving the Occupation Certificate. The Company made necessary compliances in view of this change.

Impact on the Rental Business

The GST rate on the Rental Business continued @ 18%. No input tax credit was available on goods and services used for the construction of a leasable building, unless to the extent specifically allowed under GST Act. Benefit for SEZs continued the zero tax rate, in case supplies were made to SEZ units and related developers and co-developers subject to the fulfilment of prescribed conditions.

Fixed Deposits

During the year under review, the Company has neither invited nor accepted/ renewed any deposits from the public.

Holding Company

Rajdhani Investments & Agencies Private Limited is the holding company, currently holds 55.56% shares of the Company.

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

The information on conservation of energy, technology absorption and foreign exchange earnings & outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 (''the Act'') read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given at Annexure-A hereto and forms part of this Report.

Particulars of Employees

The information required pursuant to Section 197(12) of the Act read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended (''the Rules'') in respect of employees of the Company drawing remuneration in excess of the limits set-out in the said Rules, is annexed to this Report.

Pursuant to the provisions of Section 136(1) of the Act, the Financial Statements are being sent to entitled members and others, excluding the information on employees'' particulars specified under Rule 5(2) & (3). The same are available on the website of the Company viz. www.dlf.in and also for inspection by members at the Registered Office/ Corporate Office of the Company up to the date of the ensuing Annual General Meeting (AGM). Any member interested in obtaining such information may write to the Company Secretary.

Share Capital

Qualified Institutions Placement

Your Company allotted 17,30,00,000 equity shares of Rs,2/each to eligible qualified institutional buyers pursuant to the Qualified Institutions Placement (QIP) at the issue price of Rs,183.40 per equity share (including a share premium of Rs,181.40 per equity share), aggregating Rs,3,172.82 crore in a sluggish capital market, validating investor confidence in the Company''s prospects.

Conversion of Compulsorily Convertible Debentures

Your Company converted 24,97,46,836 Compulsorily Convertible Debentures (CCDs) on 29 March 2019 into an equal number of equity shares of Rs,2/- each at a price of Rs,217.25 per share (including a premium of Rs,215.25 per share) to the promoter/ promoter group entities.

Employee Stock Option Scheme

Your Company also allotted 4,08,084 equity shares of Rs,2/- each fully paid-up upon the exercise of stock options by eligible employees under the Employee Stock Option Scheme, 2006.

Consequently, the paid-up equity share capital of the Company increased to Rs,441.44 crore equity shares comprising 2,20,72,21,948 equity shares of Rs,2/- each fully paid-up.

The above allotted equity shares rank pari-passu in all respects with the existing equity shares of the Company, including dividend and/ or any corporate benefits declared by the Company from time to time following allotment.

Employee Stock Option Scheme

Disclosures with respect to stock options as required under Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 are available on the website of the Company viz. www.dlf.in. During the year under review, there has not been any change in the Company''s Employee Stock Option Scheme, 2006.

A certificate from S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, as required under Regulation 13 of the said Regulations, with respect to the implementation of the Company''s Employee Stock Option Scheme, 2006, is available for inspection at the Registered Office/ Corporate Office of the Company and shall also be available at the ensuing AGM.

The relevant disclosures in terms of Ind AS relating to share based payment, forms part of notes to the Standalone Financial Statement and Consolidated Financial Statement of the Company.

Subsidiaries and Consolidated Financial Statements

As on 31 March 2019, the Company had 106 subsidiary companies in terms of the provisions of the Act. Further, details of changes in subsidiaries and associates during the year are given at Annexure-D.

As required under the Listing Regulations and Section 129 of the Act, the consolidated financial statements of the Company were prepared by the Company in accordance with the applicable Ind AS and form a part of the Annual Report. A statement containing the salient features of the Financial Statements of the subsidiaries, joint ventures and associates of the Company in Form AOC-1, as required under the Companies (Accounts) Rules, 2014, form a part of the Notes to the financial statements. The highlights of the performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company are included as a separate section and form a part of this Annual Report.

Pursuant to the provisions of Section 136 of the Act, audited financial statements of the Company, including consolidated financial statements, other documents required to be attached thereto and audited financial statements of each of the subsidiaries, are available on the website of the Company and may be accessed at http://www.dlf.in/downloads.aspx. These documents would also be available for inspection at the Registered Office/ Corporate Office of the Company and its respective subsidiary companies between 2.00-4.00 P.M. on all working days.

In terms of the provisions of the Listing Regulations, your Company has a policy for determining ''Material Subsidiary'' and such policy is available on the Company''s website at the link http://www.dlf.in/images/downloads/Material-Subsidiary-Policy-Revised.pdf.

Material Unlisted Subsidiary

During the year under review, your Company had four material unlisted subsidiaries namely, DLF Cyber City Developers Limited, DLF Assets Private Limited, Caraf Builders & Construction Private Limited (since merged with DCCDL) and DLF Home Developers Limited.

DLF Power & Services Limited became a material unlisted subsidiary with effect from 1 April 2019. The Company appointed an Independent Director(s) on the Board of the respective material subsidiary, wherever applicable, in compliance with the provisions of the Listing Regulations.

Joint Venture

During the year under review, your Company, through its wholly-owned subsidiary DLF Home Developers Limited (DHDL), entered into a joint venture with Green Horizon Trustee Limited (an affiliate of ''HINES'') for the development of a high-end commercial project in Gurugram. The project will be developed on 11.76 acres owned by the joint venture company. The land parcel is located across the existing business district of DLF Cyber City, Gurugram. DHDL holds 67% stake in the joint venture, while 33% is held by joint-venture partner with the option to increase its stake to 49%. The joint venture partner invested approximately Rs,500 crore in the first tranche.

Scheme of Amalgamation/ Arrangement

a) The Board of Directors of your Company approved the scheme of arrangement, comprising merger/ demerger of wholly-owned subsidiary companies - DLF Phase-IV Commercial Developers Limited, DLF Real Estate Builders Limited, DLF Residential Builders Limited (Transferor Companies) and demerger of the real estate undertaking of DLF Utilities Limited with DLF Limited (Transferee Company) pursuant to Section 232-234 and other relevant provisions of the Act read with rules made thereunder.

The scheme of arrangement/ merger is pending before the Hon''ble National Company Law Tribunal, Chandigarh Bench.

b) The Hon''ble National Company Law Tribunal, Principal Bench, New Delhi, vide its order dated 4 January 2019, has sanctioned the scheme of arrangement involving de-merger of SEZ undertaking of DLF Home Developers Limited (DHDL), a wholly-owned subsidiary of the Company into DLF Info City Chennai Limited (DICCL), a wholly-owned subsidiary of DHDL.

c) The Hon''ble National Company Law Tribunal, Principal Bench, New Delhi, vide its order dated 8 April 2019, sanctioned the scheme of amalgamation/ arrangement involving the merger of DLF South Point Limited (DSPL) with DLF Commercial Developers Limited (DCDL) and demerger of the Hyderabad SEZ undertaking of DLF Commercial Developers Limited into DLF Info City Hyderabad Limited (DICHL).

d) The Hon''ble National Company Law Tribunal, Chandigarh Bench, vide its order dated 27 September

2018, sanctioned the scheme of amalgamation involving the merger of Caraf Builders & Constructions Private Limited with DLF Cyber City Developers Limited.

Listing at Stock Exchanges

The equity shares of your Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE). The Non-convertible Debentures issued by your Company are also listed on the Wholesale Debt Market (WDM) segment of BSE.

Management Discussion and Analysis Report

The Management Discussion and Analysis Report as required under Regulation 34 read with Schedule V to the Listing Regulations forms part of this Report.

Corporate Governance Report

The Corporate Governance Report, as stipulated under Regulations 17 to 27 & 46(2) and paragraphs C, D and E of Schedule V to the Listing Regulations forms part of this Report.

The requisite certificate from S.R. Batliboi & Co. LLP, Chartered Accountants, Statutory Auditors of the Company, confirming compliance with the conditions of corporate governance as stipulated under the Listing Regulations is attached to the 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) they 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 31 March 2019 and the profit and loss of the Company for that period;

(iii) they 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) they have prepared the annual accounts on a going concern basis;

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

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

Declaration by Independent Directors

The Independent Directors of your Company submitted declarations of their Independence as required under Section 149(7) of the Act and the Listing Regulations, confirming that they meet the criteria of independence as provided in Section 149(6) of the Act and Rules framed thereunder and Regulation 16(1)(b) of the Listing Regulations. There was no change in the circumstances effecting their status as Independent Directors of the Company. The Board reviewed the certificates and noted that all Independent Directors are independent of the Company''s management.

Board and its Committees

The Board of Directors met seven times during the FY 2018-19. The details on the composition of the Board, committees, meetings held and related attendance are provided in the Corporate Governance Report and form a part of this Report.

Auditors & Auditor’s Report

S.R. Batliboi & Co. LLP, Chartered Accountants (FRN 301003E/ E300005) were appointed as Statutory Auditors of the Company for a term of five consecutive years from the conclusion of 52nd AGM till the conclusion of 57th AGM, subject to ratification of their appointment at every subsequent AGM. The Ministry of Corporate Affairs vide notification dated 7 May 2018 obliterated the requirement of seeking members'' ratification at every AGM on appointment of statutory auditors during their tenure of five years.

The Notes on financial statements (including the Consolidated Financial Statements) referred to in the Auditor''s Report are self-explanatory and do not call for any further comments. The Auditor''s Report does not contain any qualification, reservation, adverse remarks or disclaimer.

Cost Auditors

During the year, M/s R. J. Goel & Co., Cost Accountants (FRN 000026) were appointed as Cost Auditors of the Company for the FY 2018-19 for conducting the audit of cost records of the Company pertaining to real estate development activities. Your Company is maintaining the requisite cost records and the Cost Audit Report for the FY 2018-19 shall be filed with the Ministry of Corporate Affairs in due course.

A certificate from the Cost Auditor certifying their independence and arm''s length relationship has been received by the Company.

As per provisions of the Act, the remuneration payable to cost auditors is required to be placed before the members in a general meeting for their ratification. Accordingly, a resolution seeking members'' ratification for the remuneration payable to M/s R.J. Goel & Co., Cost Accountants is included in the notice convening the AGM.

Secretarial Auditor

Dr. K.R. Chandratre, Company Secretary in practice was appointed as Secretarial Auditor to conduct Secretarial Audit for the FY 2018-19. In terms of the Regulation 24A of the Listing Regulations, the Secretarial Compliance Report and Secretarial Audit Report of the Company together with material unlisted subsidiaries, namely DLF Cyber City Developers Limited, DLF Home Developers Limited and DLF Assets Private Limited for the financial year ended 31 March 2019 are at Annexure-B. The said reports are self-explanatory and do not contain any qualification, reservation and adverse remarks or disclaimer.

Reporting of frauds by Auditors

During the year under review, the Statutory Auditors and Secretarial Auditor have not reported any instances of frauds committed by the Company, its officers or employees under Section 143(12) of the Act.

Secretarial Standards

The Secretarial Standards i.e. SS-1 & SS-2 relating to meetings of the Board of Directors and General Meetings, respectively have been duly followed by the Company.

Directors and Key Managerial Personnel

The members of your Company have passed Special Resolutions with requisite majority through postal ballot process on 29 March 2019 approving the re-appointments of Dr. Kashi Nath Memani (DIN 00020696) and Dr. Dharam Vir Kapur (DIN 00001982) as Independent Director(s) for a second term of two consecutive years with effect from 1 April 2019. Further, the members approved re-appointments of Mr. Pramod Bhasin (DIN 01197009), Mr. Rajiv Krishan Luthra (DIN 00022285) and Mr. Ved Kumar Jain (DIN 00485623) as Independent Director(s) for a second term of five consecutive years with effect from 1 April 2019. The members also approved the continuation of Mr. Amarjit Singh Minocha (DIN 00010490), pursuant to Regulation 17(1) of Listing Regulations, who has attained the age of 75 years, as an Independent Director for the remaining period of his existing term of Directorship

i.e. up to 19 May 2020. The Board of Directors considered that in view of their illustrious profile, enriched experience, expertise and deep business acumen vis-a-vis. their extensive involvement in the deliberations of the meetings of the Committees of Directors and Board of the Company, their continued association as Independent Directors would be of benefit to the Company and stakeholders.

The Board of Directors of your Company at its meetings held on 25 September 2018 and 5 February 2019 based on the recommendations of Nomination and Remuneration Committee has approved, subject to approval of the members, re-appointment of Dr. K.P. Singh (DIN 00003191), Whole-time Director designated as Chairman for a further period of five years with effect from 1 October 2018, Mr. Mohit Gujral (DIN 00051538), Chief Executive Officer & Whole-time Director and Mr. Rajeev Talwar (DIN 01440785), Chief Executive Officer & Whole-time Director for a further period of five years with effect from 14 February 2019 and Mr. Rajiv Singh (DIN 00003264), Whole-time Director designated as Vice Chairman for a further period of five years with effect from 9 April 2019.

The Board of Directors of your Company based on the recommendation of the Nomination and Remuneration Committee has co-opted Ms. Priya Paul (DIN 00051215) as an additional director of the Company in capacity of independent woman director with effect from 1 April 2019 pursuant to the Regulation 17(1) of the Listing Regulations, subject to the approval of the members, statutory and regulatory authorities.

Nomination and Remuneration Committee on the basis of performance evaluation and contribution made by Lt. Gen. Aditya Singh (Retd.) (DIN 06949999) during his tenure, has recommended to the Board his continued association for a second term of five consecutive years with effect from 29 August 2019 as an Independent Director of the Company, not liable to retire by rotation, would be in the interest of the Company. The Board recommends to the shareholders for re-appointment of Lt. Gen. Aditya Singh (Retd.).

The Company has received the requisite notices from the members in writing, proposing the names of Ms. Priya Paul and Lt. Gen. Aditya Singh (Retd.) for their appointment/ re-appointment as Independent Directors.

Pursuant to the provisions of Section 152 of the Act read with Articles of Association of the Company, Ms. Pia Singh (DIN 00067233) and Mr. G.S. Talwar (DIN 00559460) are liable to retire by rotation at the ensuing AGM and, being eligible, have offered themselves for re-appointment. The resolutions seeking members'' approval for their re-appointment form part of the notice.

Mr. B. Bhushan expressed his inability to continue on the Board as an Independent Director upon the completion of his term i.e. 31 March 2019, due to his advanced age and ill health and ceased to be an Independent Director.

A brief resume of the Directors seeking appointment/ re-appointment, along with other details as stipulated under Regulation 36(3) of the Listing Regulations and the Act, are provided in the Corporate Governance Report and Notice for convening the AGM.

Mr. Saurabh Chawla, Group CFO, was separated from the Company with effect from 1 February 2019 and Mr. Ashok Kumar Tyagi, Whole-time Director, was given the additional responsibility as Group CFO. Mr. Subhash Setia is the Company Secretary and Compliance Officer of the Company.

Corporate Social Responsibility (CSR)

In line with your Company''s motto of ''Building India'', it is equally concerned of its responsibility of ''Building Lives'' of underserved communities and stakeholders residing in and around DLF projects - equal partners in the DLF growth story. Your Company has continuously endeavoured to contribute towards building capacities and creating resources better the lives of the marginalized. For all social development projects, DLF follows an integrated holistic approach to ensure that its programmes enhance lives of the underserved in the area of education, skilling, livelihood culture, healthcare and social infrastructure.

The CSR programmes of DLF were implemented through its CSR arm i.e. DLF Foundation. The projects undertaken during the year under review focused on the creation of a positive and lasting impact on the lives of the underprivileged.

The Board, based on the recommendations of the CSR 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''swebsiteviz. http://www.dlf.in/images/downloads/ Corporate-Social-Responsibility-Policy-Revised.pdf.

DLF also made a significant contribution in community welfare initiatives through education, training, health, environment, capacity building, skill development and rural-centric interventions through DLF Foundation and other agencies. The employees of DLF participated in a number of such initiatives.

The Annual Report on CSR activities, as per the prescribed format under the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, is annexed at Annexure-C.

Environment & Sustainability

In line with the ''Go Green'' philosophy, your Company continued to invest in new techniques to eliminate or minimize the environmental impact. Your Company undertook projects aimed at climate change mitigation comprising the use of LED lighting and solar PV-based roof to reduce energy consumption and related carbon footprint. Your Company invested in energy-efficient motors, rain water harvesting, tree plantations, waste water and solid waste management and the launch of certified Green Building projects with Platinum and Gold rating.

DLF achieved a 13% reduction in carbon emissions during the year under review. It replaced conventional lights with LED, saving 40 lakhs electricity units. It installed STPs for the zero discharge of water coupled with an investment in rain water harvesting across its facilities. Your Company periodically monitored toxic emissions and implemented corresponding waste management systems.

Over the years, your Company extended beyond statutory requirements in improving the quality of environment within its operating ecosystem. It formalized and adopted a Corporate Environment Policy, which is available on the website of the Company - http://www.dlf.in/ environmental-policy.aspx.

Extract of Annual Return

The extract of Annual Return in form MGT-9 as provided under Section 92(3) of the Act read with Companies (Management and Administration) Rules, 2014, is annexed at Annexure-D.

Awards and Accolades

Your Company continues to lead its sector and received number of awards. The details of the major awards and accolades received during the year are given at Annexure-E.

Business Responsibility Report (BRR)

The BRR describes the initiatives taken by the Company from social, environmental and governance perspectives and annexed at Annexure-E.

Particulars of Loans, Guarantees and Investments

Particulars of loans, guarantees and investments have been disclosed in the notes to the standalone financial statements.

Transactions with related parties

The Company possesses adequate procedures for the identification and monitoring of related party(ies) and related party transactions. None of the transactions with related parties falls under the scope of Section 188(1) of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) and 136(1) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, as amended are available on the website of the Company viz. http://www.dlf.in/downloads.aspx.

The Company''s policy for related party transactions regulate the transactions between the Company and its related parties. The said policy is available on the Company''s website viz. http://www.dlf.in/images/ downloads/Related-Party-Transactions-Policy.pdf. The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and its related parties.

For details on related party transactions, members may refer to the notes to the standalone financial statements.

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 are provided in the Corporate Governance Report. The said policy is available on the Company''s website viz. http://www.dlf. in/images/downloads/Nomination-and-Remuneration-Policy-Revised.pdf.

Board Evaluation

Pursuant to the provisions of the Act, Regulation 17 & 25 of the Listing Regulations and Guidance Note on Board Evaluation issued by the SEBI, Nomination and Remuneration Committee has devised criteria for evaluation of the performance of Directors including Independent Directors. The Board has carried out the annual performance evaluation of its own performance, its Committees and Directors. The exercise was led by the Lead Independent Director. The evaluation process focused on various aspects of the Board and Committees functioning such as composition of the Board and Committees, experience and competencies, performance of specific duties and obligations, corporate governance & compliance management etc. Separate exercise was carried out to evaluate the performance of Non-executive Directors on parameters such as experience, attendance, acquaintance with the business, effective participation, vision and strategy, contribution and independent judgment.

Internal Financial Control

Internal financial controls represent an integral part of the risk management process. These controls address, among others, financial and non-financial risks. The internal financial controls were documented and augmented in day-to-day business processes. Assurance on the effectiveness of internal financial controls was obtained through management reviews, self-assessment, continuous monitoring by functional experts as well as testing by the Statutory/ Internal Auditors during the course of their audits. The internal audit was entrusted to Grant Thornton India LLP and KPMG. The main thrust of internal audit was to test and review controls, appraisal of risks and business processes, besides benchmarking controls with the best industry practices.

The Board adopted policies and procedures to ensure the orderly and efficient conduct of its business, including adherence to the Company''s policy, safeguarding of its assets, prevention and detection of fraud, error reporting mechanism, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

Significant audit observations and follow-up actions were reported to the Audit Committee.

The Company''s internal control system is commensurate with the nature, size and complexities of operations.

Risk Management

Pursuant to the requirement of Regulation 21 of the Listing Regulations, Risk Management Committee is responsible to frame, implement, monitor risk management plan including cyber security and to ensure its robust effectiveness. The details of the Committee and its terms of reference are set-out in the Corporate Governance Report, which is a separate section of this Annual Report.

The Company established a risk management framework enabling risks to be identified, assessed and mitigated appropriately with respect to internal and external risks. The respective Functional/ Business Unit Head(s) were entrusted with the responsibility of identifying, mitigating and monitoring risk management. Risk management forms an integral part of the management''s policy and is an ongoing process integrated deeply into every-day operations.

The processes and guidelines of the risk management policy/ plan provide a strong overview and monitoring system at the Board and senior management levels.

The Risk Management Committee and Audit Committee also seek an independent assurance on specific risks from the internal audit or other assurance reviews.

Significant and material orders passed by Regulators or Courts

During the year under review, no significant material order was passed by the regulators/ courts which would impact the going concern status of the Company and its future operations. However, some significant orders passed previously form a part of Note 50 to the standalone financial statements.

Vigil Mechanism

The Company''s vigil mechanism comprises a Whistle Blower Policy in line with the Listing Regulations to deal with instances of unethical and/ or improper conduct and auctioning suitable steps to investigate and correct them. The details of the Whistle Blower Policy are explained in the Corporate Governance Report and posted on your Company''s website.

Policy for Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace

Your Company continues to follow a robust policy on ''Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace''. The Internal Committee was constituted as per the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year under review, no case was reported. The Company continues to promote the cause of women colleagues, through ''Jagruti'', all-women''s forum for experience sharing, creating awareness on women''s safety/ related issues, celebrating important days dedicated to women and organizing workshops on gender sensitivity.

Acknowledgements

Your Directors wish to place on record their sincere appreciation to all the employees for their dedication and commitment. Their hard work and unstinting efforts enabled the Company to sustain its performance and consolidate its sectoral leadership.

Your Company continues to be respected by stakeholders, including valuable customers. Your Directors would like to express their sincere appreciation for assistance and co-operation received from vendors and stakeholders, including financial institutions, banks, Central and State Government authorities, customers and other business associates, who extended their valuable support during the year under review. It will be the Company''s Endeavour to nurture these relationships in strengthening business sustainability.

For and on behalf of the Board of Directors

(Dr. K.P. Singh)

Chairman

21 May 2019 (DIN 00003191)

Source : Dion Global Solutions Limited
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