The document analyzes DLF's corporate governance practices across several attributes. It finds that DLF treats shareholders highly, with a 20.2% ROI and 200% dividend rate, but treats employees below average, with compensation cost reductions despite increased staffing. DLF also treats debtholders, customers, suppliers, and society above average or highly. It has strong credit ratings, customer relationship management systems, joint ventures with suppliers, and corporate social responsibility programs. However, risks include exposure to India's real estate industry and new non-real estate ventures. Overall, DLF receives a corporate governance value rating of 4 out of 10.

1. DLF – Corporate Governance
Report

2. Equitable Treatment of Shareholders
 The extent of disclosure of shareholding pattern – Above
Average (since shareholding information on promoter, exec and non exec directors are disclosed.)
 The extent to which the majority shareholder acts in the
interest of minority shareholders and all other stakeholders –
Average (Almost 1100 minority shareholders were deprived when there were not made a part of DLF’s
restructuring.)
 The systems in place to detect and prevent insider trading –
Very High (DLF has a policy of prevention of Insider Trading in place in accordance with SEBI regulations. No
case registered till date.)
Rating of this attribute – 4 / 10

3. Value creation for Stakeholders
Stakeholder Key Parameters Remarks Rating
Shareholder • Return on Investments (ROI)
= 20.2%
• Dividend Rate = 200%
(including interim dividend
at 100%)
DLF’s balance sheet
size improved
significantly with the
launch of its public
offering in the equity
markets. The
shareholders’ funds
improved to Rs 196.9 bn
from Rs 35.6 bn
High

4. Value creation for Stakeholders
Stakeholder Key Parameters Remarks Rating
Debtholder • Crisil Credit
Rating – AA
• Debt
Protection
Measures –
Strong
• Strong Balance sheet to
withstand downtimes and
leverage opportunities (Net
worth - Rs 196,883 mn; cash
reserves - Rs. 21,421 mn)
• Strengths partially offset by
–
• Risks inherent to
Indian real estate
industry
• DLF’s aggressive
plans to diversify
into non real estate
businesses (hospitality,
insurance etc…). New
ventures are capital
intensive, and have
long gestation periods.
Therefore, DLF will be
exposed to significant
business risks as a
Above
Average

5. Value creation for Stakeholders
Stakeholder Key Parameters Remarks Rating
Customer • Market Share –
15 to 20%
• Customer
Relationship
Management –
Effective
DLF is in the process of setting
up systems for customer
management –
• Capable of handling a huge
integrated database that shall
be used for auto
communication, call/lead
management and
interactive web
communication
• Revamping of corporate
website to accommodate
customer facilities like online
payments, auto-
communication, 3D-
walkthroughs for new
projects and community blogs
have also been initiated
Above
Average

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

7. Value creation for Stakeholders
Stakeholder Key Parameters Remarks Rating
Supplier • Credit Terms /
Supplier
Relations – DLF
has Joint
Ventures with
several of its
suppliers
•Restrictive credit flows
continue in the real estate sector
•To mitigate these factors, DLF has
set up professional teams, at
corporate and local levels, to
address the issue of project
approvals
•DLF has independent JV’s in
the execution space –
•Construction JV with
Laing O’Rourke has
substantially scaled up
business
•JV with WSP for
engineering and design
services added strength and
technical expertise to the
project design capabilities
High

8. Value creation for Stakeholders
Stakeholder Key Parameters Remarks Rating
Society • Corporate
Citizenship /
Social
Responsibili
ty
• CSR integrated into the
Company’s business strategy of
Building India and becoming the
world’s most valued real estate
developer.
• Made significant investments in
community welfare initiatives –
• Education: Set up schools
for under privileged;
Establishment of a
residential non-profit school
in carpentry and masonry for
training potential employees
• Health: Set up Rural
Primary Health Centres;
First Aid Centres, Funded
hospital
• Construction Workers:
Setting up of a Sewage
Treatment Plant; a garbage
management system;
Above
Average

9. 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

10. References
 http://www.suchetadalal.com/articles/display/80/2493.articl
.
 http://www.financialexpress.com/news/Sebi-to-be-cautious-i
 2008 Annual Report
 CRISIL Credit Rating – March 12, 2008