DIRECTORS' REPORT

Your 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.

Review of Operations

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

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 super­annuated 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 there under. 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 filed 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

 (DIN 00003191)

Date :  May 20, 2015