India's largest realty firm DLF has asked the company's independent directors to suggest ways to push the growth of its rental business.
DLF's rental income from commercial properties, including offices and shopping malls, was Rs 1,950 crore last fiscal. It is targeting 8 per cent growth in the rental business this fiscal to Rs 2,100 crore.
DLF said the Board of Directors, in its meeting on August 29, "requested the independent directors of the company who are members of the Audit Committee, chaired by K N Memani to comprehensively evaluate, review and recommend various strategic options available for the Company to drive sustainable and long term growth and development of the rental business".
The independent directors have also been asked to recommend the optimum structure for the rental business in order to improve efficiency and to reduce conflicts of interest, if any, inter-se affiliated persons/entities in keeping with the best corporate governance practices, DLF said in a filing to the BSE.
In a separate filing, DLF said the board has appointed Lt Gen Aditya Singh (Retd) as a non-executive independent director. "With this appointment, the company is fully compliant with clause 49 of the listing agreement."
The company now has seven independent directors. DLF has about 28 million sq ft of operational commercial area, of which about 2.5 million sq ft is retail. It has three operational malls in the national capital.
Rental income could reach Rs 2,500 crore during 2015-16 on the back of normal 8-10 per cent growth plus additional Rs 200 crore coming from Noida mall, sources had said earlier this month.
DLF has divided its entire operations into two divisions -- development business (DevCo) and rental business (RentCo). Earlier this month, DLF stated in an analyst presentation that the attributable net debt to RentCo (commercial arm) will continue to increase as RentCo EBITDA rises. "Target is to make DevCo (residential arm) debt free," it said.
DLF's net debt stood at Rs 19,064 crore as on June 30. DLF posted 29 per cent fall in consolidated net profit at Rs 127.77 crore in the first quarter of this fiscal compared with Rs 181.19 crore a year-ago.
For the last fiscal, DLF had posted a net profit of Rs 646 crore over a turnover of Rs 9,790 crore. DLF has a total developable potential of 307 million sq ft, of which 57 million sq ft area is under construction.
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