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INTRODUCTION

The DLF Group, is India's largest real estate company in terms of revenues, earnings,market capitalization and developable area. It has a 62-year track record of sustained

growth, customer satisfaction, and innovation. The group has over 231 msf ofcompleted development and 423 msf of planned projects, and has pan India presenceacross 32 cities.

DLF's primary business is development of residential, commercial and retailproperties. The company has a unique business model with earnings arising fromdevelopment and rentals. Its exposure across businesses, segments and geographies,mitigates any down-cycles in the market. DLF has also forayed into the infrastructure,SEZ and hotel businesses.

The business of DLF is organized on a SBU basis. The Homes SBU caters to 3segments of the residential market - Super Luxury, Luxury and Mid-Income. The

product offering involves a wide range of products including condominiums,duplexes, row houses and apartments of varying sizes. DLF has 214 msf of developedarea under homes and residential plots. Currently, DLF has more than 319 msf of landresource targeted towards residential business.

The Office SBU took DLF across the country, predicated on the customer demand foroffice space at different geographic locations. Nearly 17 msf of ongoing projectsforms a strong portfolio for DLF offices.

The Retail Mall's and Commercial Complexes SBU is a major thrust area for DLF.Currently, DLF is actively creating new shopping and entertainment spaces all overthe country. The company has 12 msf of retail projects and commercial complexesunder construction.

DLF Hotels has also entered into a JV with Hilton to set up a chain of business hotelsand service apartments across India. DLF holds 74% and Hilton holds 26% equity inthe JV.

DLF has a strong management team running independent businesses, thoughcomplementing each other in cases of opportunities of mixed land use. DLF's mission

is to build a world-class real estate development company with the highest standards

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of professionalism, ethics and customer service and to thereby contribute to andbenefit from the growth of the Indian economy.

DLFs SBU

RETAIL OFFICE COMMERCIAL HOTELS HOMES

RESIDENTIALSPACE

GROUPS

Vision, Mission & Values

DLF Vision

To contribute significantly to building the new India and become the worlds mostvaluable real estate company.

DLF Mission

To build world-class real-estate concepts across six business lines with the higheststandards of professionalism, ethics, quality and customer service

DLF Values

Sustained efforts to enhance customer value and quality Ethical and professional service

Compliance and respect for all community, environmental and legalrequirements.

DLF's Presence

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The following map illustrates the locations of our developments, projects and landsacross India, as of November 30, 2006:

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Corporate Governance

Code of Conduct

1. Introduction

DLF Limited and its subsidiaries (hereinafter referred to as the Company) is aleading professionally managed Company emerging as the one of the foremostenterprise in real estate development. It has over 60 years of experience, anestablished brand name, a highly experienced, qualified and motivated managementteam with a high reputation for project execution. The formation and management ofmany subsidiary and partnership companies is considered necessary in real estatedevelopment to ensure effective governance in dealing with legal and commercialrequirements.

The Companys philosophy on Corporate Governance is built on a rich legacy of fair,transparent and effective governance. This includes respect for human values,

individual dignity and adherence to honest, ethical and professional conduct. Thisenables customers and all stake holders to be partners in the Companys growth and

prosperity.

The Companys Code of Conduct not only ensures compliance with the CompanyLaw, the provisions of the listing agreement with Stock Exchanges and other laws,

but goes beyond to ensure exemplary Corporate Governance. Accordingly, the Boardof Directors of DLF Limited have adopted the following code that details thefollowing:

Guidance on ethical standards of conduct on various matters including conflictof interest, acceptance of positions of responsibilities, treatment of businessopportunities etc.; Responsibility to comply with Insider trading regulations and applicable lawsand regulations; and Procedure for annual affirmations to the Code of Conduct by Directors and theSenior management.

2. Objective

This code of conduct document has been created in furtherance of the Companyscommitment to building a strong culture of corporate governance by promoting the

importance of ethical conduct and transparency in the conduct of its operations. Thiscode lays down the standards of conduct that shall apply to its Directors and allEmployees of the Company and shall come into force with effect from 21st day ofMarch, 2007.

3. Definitions

The definitions of some of the key terms used in this Code are given below

i. Director means any Executive, Non-Executive, Nominee or AlternateDirector of the Company.

ii. Employee means any employee or officer of the Company.

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iii. Relative means relative as defined in Section 2(41) and Section 6 readwith schedule 1A of the Companies Act, 1956.

iv. Senior Management means personnel of the Company who are members ofits Core Management team excluding the Board of Directors and shall includeall personnel above the level of Vice-President and all function heads.

4. Applicability

This Code is applicable to the following:

a. All Employees of the Company including Senior Management; andb. All Directors of the Company.

This Code does not address every possible form of unacceptable conduct and it isexpected that the Directors and the Employee shall apply their sound judgment to

comply with the principles set forth in the Code.

5. Standards of Conduct

The Directors and employees shall conduct the Company's business in an efficientand transparent manner in meeting its obligations towards the shareholders and otherstakeholders. The Directors and employees shall not be involved in any activity thatwould have any adverse effect on the objectives of the Company or against nationalinterest. The following elucidates the Companys position on the manner of conductof the Companys business and transactions:

a) Compliance with applicable lawsDLF requires that its employees and Directors strictly comply with the applicablelaws and regulations in the conduct of its business, both in letter and spirit. If theethical standards set forth in this policy are more rigorous than the applicable lawsand regulations, then the standards of the DLF Code of Conduct shall prevail.

b) Conflict of Interest

Conflicts of interest may appear where on account of either on undertaking or in theact of influencing a business transaction, relationship, or an activity, the Director orEmployee is in a position to derive a personal benefit for himself or for a relative or arelated party (as described in the Companies Act, 1956). It includes instances where

the independent judgment of such a Director or Employee to work towards the bestinterests of the Company may be or perceived to be impaired.

In case of an Employee, where such conflict appears at any time or is in existence atthe time of the implementation of this policy, such Employee shall forthwith make adisclosure in writing to the Chief Executive (Corporate Affairs), who in turn shallcompile such disclosures for review by the Corporate Governance Committee. Uponreview by the Corporate Governance Committee, the Employee may be directed toavoid/resolve the conflict or to take such remedial action as is deemed suitable by theCorporate Governance Committee.

A Director shall disclose any potential conflicts of interests to the Board of Directors

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or any Committee thereof and abstain from participating in the decision making or ininfluencing the decision on the areas resulting in the potential conflict of interest inaccordance with the applicable rules under the Companies Act. In addition, theDirector shall provide on a periodic basis, such disclosure as is required by the Boardof Directors or any Committee thereof.

c) Business opportunities

The Directors and Employees are hereby prohibited from taking for themselvespersonally, any opportunities that are discovered through the use of Companysproperty, information or position, unless the opportunity is disclosed fully in writingto the Corporate Governance Committee and the Corporate Governance Committeeauthorizes the said Director or the Employee to pursue such opportunity.

The Directors and Employees are also prohibited from competing directly with the

business of the Company.

d) Acceptance of Employment / Position of responsibility

Employees are expected to devote their total attention to the business interests of theCompany. Prior approval of the Corporate Governance Committee must be sought inwriting prior to accepting any position of employment or responsibility (such asDirectorship etc.) outside the Company.

Directors other than Non-Executive and Independent Directors are required to obtainthe express approval of the Corporate Governance Committee prior to accepting anyDirectorship outside the Company.

e) Insider Trading and fraudulent & unfair practices in the securities market

A Director or the Employees and their relatives shall not derive any benefit or assistothers to derive any benefit from the access to and possession of information aboutthe Company, which is not in the public domain and thus constitutes insiderinformation. They shall also ensure compliance with SEBI (Prohibition of InsiderTrading) Regulations, 1992 as also other regulations as may become applicable tothem from time to time in addition to the Companys Policy for Prevention of InsiderTrading.

The Company also prohibits its Directors and Employees in undertaking anyfraudulent or unfair trade practice in connection with the securities of the Company.

f) Financial reporting and disclosures

The Company is committed to ensuring that its financial statements and reporting:

i. Does not contain any untrue statement;ii. Does not omit any material fact or has contents that might be misleading; and

iii. Strives to present a true and fair view of the Company's affairs in compliancewith the prevailing Accounting Standards and applicable laws and regulations.

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The Directors and Employees shall ensure that there shall be no willful omission ofany Company transactions from the books and financial records and all requiredinformation shall be provided to the Auditors.

g) Health, Safety and Environment

The Company strives to provide a safe and healthy working environment and comply,in the conduct of its business affairs, with all regulations regarding the preservation ofthe environment of the territory it operates in. The Company is committed to preventthe wasteful use of natural resources and minimize any hazardous impact of thedevelopment, use and disposal of any of the intermediaries or direct materials used inits product and service offerings on the ecological environment.

h) Protection of the Companys Assets

The Companies Assets shall be protected from theft, loss, damage or misuse and shallnot be employed for conducting any illegal activity or for purpose other than ofconducting the business of the Company.

The Directors and the Employees shall not use the Companys tangible assets such asequipment and machinery, systems, facilities, materials etc. or intangible assets suchas proprietary information, relationships with customers and suppliers, etc. for their

personal benefit or for the benefit of a related party.

i) Competition

DLF is committed to a fair and competitive free market system. The Directors andEmployees of the Company are prohibited to take any action that are anti-competitiveor otherwise contrary to laws that govern competitive practices in the marketplace.

j) Public Representation

It may be necessary to communicate information relating to the Company, itsoperations and performance to its stake-holders, media, stock-exchanges etc. In all its

public appearance with respect to disclosing any information in relation to theCompanys activities or performance to any public constituency such as the Media,financial community etc, the Company shall be represented only by duly authorized

personnel. This policy establishes that matters relating to public representation of theCompany shall be handled by the Chairman or Vice-Chairman or the ManagingDirector or the Head of Corporate Communications department (or such person towhom the Head of Corporate Communications has delegated his authority) or such

persons as are authorized by the Board of Directors or the Chairman. In addition, theChief Financial Officer is duly authorized to make suitable public representation inrelation to financial matters. Where a Director or an Employee seeks to publish a

book, article or manuscript containing reference to the Company or itsbusiness/processes, such person should obtain prior approval of the CorporateGovernance Committee. The Committee may grant such approval on terms andconditions that it may deem fit such as pre-review/changes to such publication by theCommittee, inclusion of disclaimers etc.

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Directors and Employees to adhere to these rules in carrying out their duties for theCompany.

The Company will take appropriate action against Director or the Employee whose

actions are found to violate these policies or any other policy of the Company.

7. Consultation and reporting

In case of any doubts/clarifications in relation to the application of the Code ofConduct, Employees are requested to consult in writing with the Chief Executive(Corporate Affairs) in the Company. Where Chief Executive (Corporate Affairs) inthe Company or the Directors need any clarifications in relation to the application ofthe Code of Conduct, they should consult in writing with the Corporate GovernanceCommittee.

Where any Director or Employee notes an act inconsistent with the principles set forth

in the Code of Conduct, he should report the same to the Chief Executive (CorporateAffairs) in the Company. Chief Executive (Corporate Affairs) in turn is required tocompile all such instances in a report along with suitable recommendation on theaction required to the Corporate Governance Committee. Such report should be

presented at least on a quarterly basis or sooner, depending on the nature of thecomplaint. Alternatively, the Director or Employee may use the Whistle-Blowermechanism provided by the Company to report any instances of violation of the Codeof Conduct.

8. Amendments and waivers

The Code may be amended or modified by the Board after due consultation with theCorporate Governance Committee. Any waiver of any provision of this Code for aDirector or the Employee must be approved in writing by the Company's Board ofDirectors.

9. Acknowledgement and annual affirmation

Directors and Senior Management personnel shall acknowledge the receipt of thisCode indicating that they have received, read and understood, and agreed to complywith the Code and send the same to the Chief Executive (Corporate Affairs). NewDirectors will submit such an acknowledgment at the time when their Directorship

begins and in case of other Management personnel when they assume the

responsibility of Senior Management personnel.

All the Directors and the Senior Management personnel to whom the Code appliesshall, within 10 days of close of every financial year affirm compliance with the Codeindicating their continued understanding of and compliance with the Code. The dulysigned Annual Compliance Declaration shall be forwarded to the Chief Executive(Corporate Affairs).

ANALYSIS OF EXTERNAL ENVIORNMENT

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ASSESSMENT OF CHANGES IN THE ENVIORNMENT

ANALYSIS OF REAL ESTATE SECTOR

Real estate is one of the fastest growing sectors in India. Market analysis pegsreturns from realty in India at an average of 14% annually with a tremendousupsurge in commercial real estate on account of the Indian BPO boom. Leaserentals have been picking up steadily and there is a gaping demand for qualityinfrastructure. A significant demand is also likely to be generated as theoutsourcing boom moves into the manufacturing sector. Further, the housingsector has been growing at an average of 34% annually, while the hospitalityindustry witnessed a growth of 10-15% last year.

Apart from the huge demand, India also scores on the construction front. AMckinsey report reveals that the average profit from construction in India is18%, which is double the profitability for a construction project undertaken inthe US. The importance of the Real Estate sector, as an engine of the nationsgrowth, can be gauged from the fact that it is the second largest employer nextonly to agriculture and its size is close to US $ 12 billion and grows at about30% per annum. Five per cent of the countrys GDP is contributed by thehousing sector. In the next three or four or five years this contribution to the

GDP is expected to rise to 6%.

The Real Estate industry has significant linkages with several other sectors ofthe economy and over 250 associated industries. One Rupee invested in thissector results in 78 paise being added to the GDP of the State. A unit increasein expenditure in this sector has a multiplier effect and the capacity to generateincome as high as five times. If the economy grows at the rate of 10% thehousing sector has the capacity to grow at 14% and generate 3.2 million new

jobs over a decade. The relaxed FDI rules implemented by India last year has

invited more foreign investors and real estate sector in India is seemingly themost lucrative ground at present. Private equity players are considering biginvestments, banks are giving loans to builders, and financial institutions arefloating real estate funds. Indian property market is immensely promising andmost sought after for a wide variety of reasons.

FACTORS THAT EFFECTED REAL ESTATE SECTOR DURING RECCESION

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Real estate sector is second to only the agriculture sector where employmentgeneration is concerned. This can be further proved by the fact that the real estatesector contributes a good 5% towards the countrys gross domestic product (GDP).

However, recent financial crisis followed by economic slowdown have placed hugestrain on this sector. While all sectors of the economy were under tremendouspressure, demand in the real estate industry was the lowest. This was largely asmajority of the homes were taken on loan and an unexpected rise in the interest ratehad its obvious impact. According to KP Singh, Chairman, DLF, "If there is a lack indemand, the projects eventually close down. There is a lack in demand because most

people take mortgage loans. In fact, currently the interest rate is at 1112 per cent,which should actually not exceed seven per cent. This also leads to higher EMIs."

Also, the credit freeze stemming from the collapse of Lehman Brothers promptedinvestors and speculators to withdraw investments from this sector. Property

developers, who raised funds through external sources, were left stranded withminimal cash flows and huge debt obligations surfacing in the near term.

There are several factors that have influenced the real estate sector's performance.Some of these factors include the unemployment rate, income level, FDI investment,rise in the number of young working population, and easy availability of home loans.With this industry being one of the primary contributors to the GDP over the past fewyears, it is indeed interesting to note the performance of companies in this sectorduring the economic slow down.

The sectoral ranking, based on consolidated revenues, revealed that top threecompanies within the sector had retained their positions from the previous year. Therehave been major changes in the list of market leaders as compared to last year. Out ofthe 10 companies in the previous year, only four retained their position among India'stop 500 companies. The current challenging economy along with the sluggish demandhad a significant impact on the top-line of most of the realty developers in thecountry. Some of the companies that witnessed a substantial dip in revenues includeOmaxe, Ajmera Realty, Parsvnath Developers, Ansal Properties & Infrastructure,JMC Projects and Indiabulls Real Estate. Collectively, no developer could sustain therevenues base recorded in FY08.

DLF, Unitech and Housing Development & Infrastructure (HDIL), though witnessed>20% fall in revenues, maintained their first, second, and third positions respectivelyin the ET sectoral list. This means, the negative impact of the financial crisis affectedall top real estate companies equally. Sobha Developers climbed up three positions tonumber four, despite a 58% decline in revenues. Its steady climb was primarily due toa sharp fall in revenues of other developers. Overall average revenues for thesedevelopers fell by 28% from the previous year. According to Sanjay Chandra,managing director of Unitech, We have changed our strategy from maximisation ofrealisation to that of volumes in order to improve operational cash flows.

A closer look into the financials elucidate that developers faced stiff margin pressure,resulting from the drop in real estate prices. Real estate prices have been sky

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rocketing for several years and a sharp correction has been long overdue. Average netmargins of the four developers slipped by a colossal 890 bps to 39.7%. This indicatesthat the companies faced higher liquidity pressure which consequently led them tounwind inventories at lower rates. The companies which have huge land bank and are

primarily funded through external sources have been wiped out of the market and are

yet recovering from losses incurred.

Valuations of the companies have bottomed out. The BSE realty index is trading at aPrice/Book value of 2.69x this year as compared to 21.11x in 2007 and 13.36x in2008. Players like Unitech and DLF have lost more than 75% of their values. DLF,which debuted the market in July 2007 entered the bear phase and remained below itsissue price. Recently, the markets have seen immense recovery with the realty indexgaining 88% from its previous low in 2008. The relaxed FDI regulation has invitedseveral players to invest in the real estate market. Various private players areconsidering investment in the sector as banks are now readily giving loans due to arise in the consumer confidence index. By 2010, it is expected that nearly 150 million

square feet of office space across urban India would be utilised by the IT sector. Theretail industry is also likely to utilise an additional 220 million sq ft by next year.

According to the Tenth Five-Year-Plan, there is a shortage of 22.4 million dwellingunits. Thus, over the next 10-15 years, 80 to 90 million residential units will have to

be constructed with a majority of them catering to middle- and lower-income groups.This will create immense opportunities for real estate companies. Now that property

prices have dropped and the risk of job layoffs has diminished, the service class islikely to actively participate in property absorption, leading to a strong recovery inresidential demand, says Suman Memani, associate vice president, Religare CapitalMarkets.

In conclusion, with early signs of recovery currently reflected by the drop inunemployment rate, easing liquidity and aggressive government initiatives to pull

back the sector, increased activity in the real estate sector should be expected.

DLFS STRENGTH AND WEAKNESS

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STRENGTH

Uniquely positioned in emerging, profitable segments:

DLF has a sizable presence across several key cities (Delhi NCR, Mumbai,Bangalore, Chennai, Kolkata, Chandigarh, Goa etc) and clear marketleadership position in commercial, retail, and lifestyle/premium

apartments. These segments are highly profitable and have significant entrybarriers. The estimated market share at ~16% in commercial offices and ~8%in retail space absorption in India over the next 2 years.

Better placed to face the macro challenges:

Commercial, retail, luxury and premium housing account for 67% of DLF's

estimated Gross Asset Value (GAV). Middle income housing segment accounts for just 24% of

DLFs GAV (56% of the development area). This segment is more susceptibleto emerging macro concerns and challenges, and thus even 50% lowerabsorption v/s estimates would impact GAV by ~11%

DLF huge land bank

DLFs current land bank stands at 13,055 acres (addition of 2,800 acres since

filing of RHP) andtotal developable area at 612m sq ft (addition of 43m sq ft). Recent land bankaddition of ~2,800 acres has been done at Rs19.3b (average cost of Rs230/sqft, assuming FSI of 1x). For DLF, land cost stands at Rs154b, i.e. an averageof Rs252/sq ft, which provides competitive advantages.

Large companies such as DLF, which have holding power, are best positionedto take large bets by acquiring large tracts of contiguous land, which couldcreate value through land bank ageing and integrated development. It is

believed that this strategy will generate better returns, which would lead tocontinuous upgrade in NAVs and allow for higher asset turnover.

Successful implementation of monetization strategies will lead to lower capitalcosts andcreate conditions for building integrated property business models, comprising

propertydevelopment, re-development, acquisitions, divestitures, leasing andmanagement

WEAKNESSES

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DLF due to its predominant positioning in the commercial office, retail and premiumapartment segments is relatively less vulnerable to the emerging macro challenges. We

believe that a significant part of the concerns pertaining to the sector are gettingcompounded in middle income housing segment, which is more sensitive to prices andhigher interest rates.

Macroeconomic risks:

Any weaker-than-expected GDP growth for the domestic economy could negatively affectsentiment of buyers, leading to elusive demand, which could render sales and earningsestimates for DLF unrealizable. Also, any further tightening measures and policy changes

by the government (with regard to mortgage applications and approvals, project financing,and property pre-sales) to curb speculationand overinvestment could adversely affect the bottom lines and cash flows of propertydevelopers and sentiment of home buyers

Real risk of decline in property prices, and concentration in Gurgaon:

Conservatively, we have assumed NO price increase in the NCR region for apartmentsduring FY08-17 and for commercial and retail during FY08-FY12. From FY13, we haveassumed a price CAGR of 5% in commercial and retail space in NCR. Other than NCR wehave assumed stagnant prices for all projects and all verticals (residential, commercial andretail) for FY08 and FY09. Given the sharp acceleration in real estate prices over the pastthree years, there exists a real probability of a price correction in certain pockets.Also, NCR region still accounts for 42% of the development area for the company, thusexposing it to significant price movements in the region.

DLFS COMPETITORS

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India Bulls HDIL Ackruti City Omaxe Group Unitech

New rivals

Bombay Dyeing, Golden Tobacco and Century Textiles. There has been a precedentwith groups like Tata, Mahindra and Godrej having turned developers. The Tatagroup has Tata Housing and Tata Realty while Mahindras venture is called MahindraLifespace Developers. Godrejs venture goes by the name of Godrej Properties.

A prominent case is that of Bombay Dyeing, a well known player in the textilebusiness. While it has entered the real estate business, it does not have a separatecompany in place.

DLFS IPO LAUNCH IN 2007

The future grand plan after the IPO launch:

DLF has outlined a three-pronged growth strategy:

1} Strengthening its pan-India presence,

2} Building up land reserves at strategic locations, and

3}Leveraging its real estate capabilities in related areas be it special economic

zones or hospitality.

The company will primarily be a developer and sell its properties retaining limited

assets to be leased out. The money raised through the IPO would go towards buying

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more land (Rs 3,500 crore -- Rs 35 billion), developing existing projects and

repayment of loans.

Going by the scale of development done so far, DLF is the largest real estate player inthe country with land reserves of 10,255 acres or about 574 million square feet (msf)

of developmental area. Of this, 171 msf is located in or near developed urban areas

while 404 msf is urbanisable.

"About 90 per cent of the total land bank is available as large contiguous plots

enabling large integrated development", says, chief executive officer Rajiv Singh.

After being centered around Delhi for many years, the company now has a nation-

wide presence across 31cities and towns. It has developed 29 msf of residential,

commercial and retail projects and integrated townships spread over 3,000 acres inGurgaon so far. Currently, some 44 msf of development is under progress and

projects involving 524 acres is planned over the next few years.

The company intends to focus on its core competence while partnering with leading

global players such as Nakheel (SEZs), Laing O'Rourke (construction), ESP

(engineering and design), Feedback Ventures (project management) for better

execution.

Right from acquiring low cost land to creating a full fledged township to realise the

true potential of the land, DLF has amply demonstrated its success in Gurgaon. Onekey advantage is that DLF's average cost of acquisition of land is fairly low at around

Rs 274 per sf which will enable it sit out the cycles and not indulge in distress sale

ever.

Some key determinants of profitability for real estate companies apart from the land

cost, is the developer's land acquisition and aggregation skills, relationship with the

state authorities and reputation -- on all these DLF scores highly.

And with its unquestionable capabilities as a successful developer, DLF seems best

placed to capitalise on the booming real estate market, which is expected to grow at20 per cent-plus annually from the current size of $40-45 billion.

Even more, the national capital region, where the company has over 50 per cent of its

land holdings, is among the fastest growing markets in the country.

Apart from the boom in retail malls and residential owning to rising disposable

income, there are several new vistas opening up for developers which DLF is

planning to tap -- for instance, SEZs which offer opportunities to create integrated

townships, hotels and serviced apartments, multiplexes, airports and the list goes on.

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According to a newly devised strategy, the company would, instead of leasing out

commercial projects, indulge in outright sale to potential buyers including DAL. This

model rests on the ground that DAL would be able to garner low cost capital by

tapping the alternative investment market overseas and pay a higher capitalization rate

for DLF's properties resulting in faster growth in revenues and better margins too.

Thus DLF wanted to apply cost differentiation leadership strategy where

through economies of scale they reduce the cost and achieve differentiation in

each of its strategic business units.

KEY ELEMENTS OF ITS EXISTING BUSINESS STRATEGY

Brand reputation

DLF has a 60-year history of service excellence. Since it was founded in 1946, ithas been responsible for the development of 21 urban colonies aggregating 5,816

acres, as well as an entire integrated 3,000-acre township - DLF City.

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DLF reputation for providing prompt payment to landowners upon the acquisition ofits land, developing and completing projects in a timely manner and conducting its

business with transparency has created a relationship of trust with its customers andsuppliers. The company retains internationally and nationally renowned architectural,construction and consulting firms for all its projects.

Extensive land reserves are the most important resource for a real estate developer. Asof April 30, 2006, DLF land reserves under development aggregated 1,372 acresrepresenting approximately 102 million square feet of developed area or areaavailable for development and it has made partial payments to acquire a further 2,893acres in various regions across India. It is estimated that it will be able to develop over118 million square feet of saleable or rentable area.

The Company benefits from economies of scale and is able to purchase large plots ofland from multiple sellers, thus enabling it to aggregate land at lower prices. Thecompany has the ability to anticipate market trends and, in some cases, to influence

the direction of such trends provides it with opportunities to acquire strategiclocations of their choice.

DLF is one of the first developers to foresee the need for townships on the outskirts offast growing cities and is credited with the growth ofGurgaon. The company is one ofthe early developers to focus on developing theme-based projects such as TheMagnolias in DLF City.

The Company has an experienced, highly qualified and dedicated management team,most of whom have over 20 years experience in their respective fields. DLFencourages responsibility, autonomy and innovation among its employees with anattractive compensation package

DLFS SOME STRATEGIC DECISIONS

DLF Laing ORourke (India):

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DLF Laing ORourke (India) Ltd is a joint venture between DLF, Laing ORourkePlc and LOR Holdings Ltd. According to the agreement, the JV company would carryout development activities in identified DLF projects for a built up space of 50m sq ftover five years with minimum of 6m sq ft each calendar year. Laing ORourke willissue a corporate guarantee in favor of DLF to secure the

JV companys performance under the projects.

Joint venture with Hilton:

DLF has entered into a joint venture with Hilton International for development andownership of a chain of hotels and serviced apartments in India. DLF will hold 74%and Hilton will hold 26% of the equity share capital of the JV company, which woulddevelop and own 50-75 hotels and servicedapartments with an equity investment of US$550m over the next five to sevenyears.The hotels and serviced apartments would be managed and operated by Hiltons

subsidiaries. DLF has agreed not to develop and manage any hotels or servicedapartments that target the same market segment as of the JV company.

Joint venture with WSP Group:

The JV company has been established to provide engineering and design consultancyand project management services for DLFs real estate plans. Both DLF and WSPGroup have equal shareholding in the JV company and have identical rights and

privileges. The JV company will provide consulting services to DLF for an initial 18months after which the JV company can target new clients inIndia as agreed by the parties. WSP is permitted to provide independent services to itscurrent as well as new clients.

Acquisition of stake in Feedback Ventures:

Necia Builders and Developers Pvt Ltd, a subsidiary of DLF, has acquired a 19%stake in Feedback Ventures at Rs72.5/ share. Feedback Ventures provides consulting,engineering, project management and development services for infrastructure projects

in India.

MoU with Nakheel:

DLF has signed an MoU with Nakheel LLC, a leading property developer in UAE, to

develop real estate projects in India through a 50:50 JV company.

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The initial two projects of the JV company would be 20,000 acres SEZ each in NCRand South Maharashtra and/or Goa.

Joint venture with Prudential Insurance:

DLF has entered into a joint venture with Prudential Insurance to undertake lifeinsurance business in India. DLF would hold 74% and Prudential would hold 26% ofthe equity share capital. DLFs 30%equity share capital and Prudential's entire shareholding would be locked in for sevenyears. Remaining shareholding of DLF would be locked in for 10 years. After thelock-in period, if any shareholder intends to transfer the shares, first offer should bemade to the non-selling shareholder. No transfer of share is permitted to thecompetitor.

Joint venture with MG Group:

DLF has entered into a 50:50 joint venture with MG group for real estatedevelopment. The board shall consist of 4-12 members. Each party is entitled toappoint one half of the board. A non-executive chairman would be nominated byDLF.

Joint venture with HSIIDC:

DLF has entered into a joint venture with HSIIDC for developing two SEZ projects.A SPV would be created in the form of a limited company to implement the project.Shareholding pattern is 90% in favor of DLF and 10% in favor of HSIIDC. Theequity holding of DLF in the SPV cannot fall below 51% andHSIIDC cannot increase it above 26%. In the event of initial public offering, DLFwould contribute its share for the lock-in period of three years and shares held by

HSIIDC would be locked in for one year. HSIIDC has the right to sell its shares andDLF has the first right to purchase it at market price. On DLFs refusal, HSIIDCwould have right to offer the shares to the public.

Memorandum of Co-operation with Fraport AG Frankfurt Airport Services:

DLF has signed a MoC with Fraport AG Frankfurt Airport Services Worldwide toestablish DLF Fraport SPV. The SPV would focus on development and management

of certain airport projects in India. The shareholding of each party shall be mutually

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agreed such that each of parties shall hold not less than 26% in the managementcompany.

DLF in talks with AT&T for mobile services

Real estate major DLF Ltd is talking to US telecom giant AT&T as a strategic partnerto roll out pan-India mobile services.

AT&T has also applied for a universal access service licence (UASL), which allows

operators to offer services in both GSM and CDMA technology, with the Mahindra &Mahindra group, for 22 circles. The US company, however, has stipulated that itwants a majority equity stake in the mobile venture.

This will be AT&Ts second coming in India after it exited Idea Cellular a few yearsago.

DLF had also applied for a pan-India licence on its own and without a foreign partner.A senior DLF executive said: We are in talks with various international telecomoperators; all the big operators will approach us.

Sources close to the development, however, confirmed that DLF has been approachedby AT&T. An AT&T India spokesperson said: We do not comment on marketrumours or speculation.

Insiders also said DLF is talking to other international telecom majors apart fromAT&T.

With over 300 Indian companies applying for pan-India UASLs, the race is on to getinternational partners with experience in the telecom sector as strategic partners. Thisis because the industry expects the government to offer only two or three licences in

each circle.

Hybrid business model

DLF has a hybrid business model, which is a blend of sale and lease. It is estimated

DLFs rental income to increase from Rs6b in FY08 to Rs43b by FY12, comprisingan

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asset base of 46m sq ft in the commercial and retail verticals. The rental streamwould enable the company a steady income source and also provide monetizationopportunities, leading to a long-term, self -sustaining growth phase.

SHAREHOLDING PATTERN:

NO. OF SHARES % OF TOTALPROMOTERS 1502823120 88.26%INSTITUTION 124231366 7.30%GENERALPUBLIC 75657427 4.44%GRAND TOTAL 1702711913 100%

CHANGE IN TOTAL INCOME QoQ:

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CHANGE IN OPERATING INCOME QoQ:

CHANGE IN NET PROFIT QoQ:

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RATIO:

30/09/07 31/12/07 31/03/08 30/06/08 30/09/08EPS 4.50185 3.558407 3.75022 4.117167 3.752981OPM 63.51832 52.03052 50.83347 68.86187 72.49094NPM 59.77961 33.42675 36.35313 46.92742 46.88816

INTERESTCOVERAGE 13.90027 7.221565 4.851037 5.495604 5.100798

EPS is showing declining trend in the last five quarter.OPM has declined earlier from 63% to 52% but later got recovered. Same trend wasalso witnessed in the NPM earlier shown a decline but later shown a recovery.Interest coverage has shown consistent decline. It has declined from 13 to 5 in justfive quarte

Analysis of the Indian economy with Respect to Real Estate Sector

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According to the United Nations Population Fund (UNFPA),India is getting urbanisedat a faster rate than the rest of the world and by 2030 more than 40.7 per cent of thecountrys population would be living in urban areas. Presently, more than 28.7 per

cent of Indias area is urban as against theglobal average of 48.7 per cent. However, the growth rate of urban areas was 2.3 percent in 2005, as against the world average of 2 per cent. The urban population of Indiawasestimated to stand at 316 million in 2005 and is the second largest in the world afterChina. It is estimated to reach 590 million by the year 2030 retaining its second

position.Indias cities have been the driving force in shaping Indias socio-economic profile.Urban areas which constitute only 28.7 per cent of the population, have been a majorcontributor tothe GDP with a major share of industry and almost the entire services sector

concentrated in the urban agglomerations.

During the last sixty years, post independence the population of India has grown twoand a half times,whereas urban India has grown by nearly five times. According to Census of India2001 estimates, 30 per cent of the total population of India would be living in urbanareas by 2011. The number of cities with one million plus population is furtherexpected to double from 35 in 2001 to 70 by 2025.Indias Mega-Cities of Mumbai and Delhi would be the worlds 2nd and 3rd largestcities by 2015. With a rapid influx of migrants in these cities there is a correspondingincrease in the demand for space. Rapid urbanisation is fostering real estate growth inIndia.

Increasing number of households

The growing popularity of nuclear families in India has decreased the averagehousehold (HH) size in the country, leading to an increase in the number of

households in thecountry. The average HH size in India has declined from 5.4 persons per HH in 1981to 5.1 persons per HH in 2001. In 2001, there were roughly 192 million HH in India,about 40 million more than those in 1991.

Growing number of first-time home buyers

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India has a much younger population compared to mostother economies. Currentlythe population in the working age group (16-65 years) is about 700 millionrepresentingabout 64 per cent of the total population. India is expected to emerge as the highestcontributor

to the global work force by 2010. Given that a majority of the population would stillbe young the per capita income generation capability of India would continue toremainrobust. With the average age of home buyers declining fast the young working

population would further push demand for housing units higher.

First-time home buyer numbers have multiplied over the years and the median age ofhome buyers has reduced from 38 years in the early 1990s to about 28 years today.

Increasing income levels:

The per capita disposable income has grown manifold in the past one decade. Thecurrent annual per capita disposable income stands at around US$ 693 and is furtherexpected to grow by 8-13 per cent in the next five years.

Robust economic growth, particularly in the services sector has led to an increase inincome levels in the country. Several studies have indicated that salaries in India have

been increasing by an average of 10-15 per cent on a year on- year basis. This hasincreased the affordability of homes in spite of higher property prices and has furthercreated more discerning buyers

Affordability of housing:

As per estimates from the National Council of Applied Economic Research (NCAER)the proportion of HH in the top five income brackets (>US$ 11,651 per annum) has

increased from 0.6 per cent in 1996 to 2.4 per cent in 2006 and is likely to increasefurther to 4.5 per cent by 2010. Also, the number of HH in the top four incomebrackets (>US$ 23000 per annum) is expected to grow at a CAGR of over20 per cent till 2010. Thus, housing is expected to become increasingly affordableespecially in the mid-market and premium segments.

Retail Real Estate:

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The Indian retail industry is witnessing a structural change with individual smallformat stores making way for large format shopping malls and hyper-markets. On the

policy front, the partial relaxation in FDI regulation (51 per cent FDI in single brandretailing) has provided a boost to the

retail segment.

Presently the top seven cities of India account for a dominant share in mall space. Thetotal organised retail space absorbed for the year 2006-07 in the top seven cities wasaround 19 million sq. ft. The following chart depicts the absorption scenario oforganised retail space for the year2006-07. National Capital Region (NCR), one of Indias most affluent urban centres,dominates the absorption scenario followed by Mumbai and Kolkata. Bengaluru isalso emergingas a major retail hub owing to its cosmopolitan character

Special Economic Zones (SEZ):

Following the success of China in boosting manufacturing exports, India has adoptedthe SEZ model albeit with private participation to provide world class infrastructure to

boostits industrial export performance.

With the fiscal benefits extended to IT Parks expected to end in 2009 severalupcoming and proposed SEZs are expected to provide the next generation impetus tothe IT commercial office space development in the country.

Offering significant fiscal benefits, SEZs are being preferred by the IT/ITES and otherservices sectors.IT/ITES sector accounts for more than 50 per cent of the approved or notified SEZs.2006-07.Till date under the new SEZ policy, formal approvals have been granted to366 SEZ proposals out of which 142 have already been notified as SEZs as on 30thAugust, 2007. In addition, around 176

proposals have been granted in-principle approvals.

In terms of industry focus, Information Technology (IT) and Information TechnologyEnabled Services (ITeS)/ Electronics/Hardware sector witnessed the maximumnumberof approvals followed by Bio-technology, Engineering etc.

With respect to type of SEZs, almost 90 per cent of the SEZs approved, were sector

specific followed by multi-product (5 per cent), multi-services (2 per cent) and FTWZ(1 per cent).

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Geographically, the maximum number of approvals were bagged by the State ofMaharashtra (75) followed by Andhra Pradesh (61), Tamil Nadu (53) and Karnataka(36).

In a recent move the Government has withdrawn the freeze on new approvalshowever at the same time the rules have been tightened by capping the land size to amaximum of 5,000 hectares in case of a multi-product SEZ

Rea l Estate Opportunities:

Health Cities: Large scale integrated development Hospitals: combining the services of a hospital and a

Hotel

Low-cost Budget Housing:

As per the Working Committee of the 11th Plan (2007-12) the total shortage ofdwelling units at the beginning of Eleventh Plan Period i.e. 2007 was 24.7 million. As

per the estimates by National Housing Bank (NHB), going forward, the gap ofhousing unit shortage would further widen to about 45 million units during theEleventh Plan (2007 2012) period E&Y estimates that more than 70 per cent ofthe shortage of dwelling units is for middle and low income brackets.

Rea l Estate Opportunities

Slum-rehabilitation Mass housing.

CASH FLOW STATEMENT

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Y/E MARCH 2006 2007 2008 2009

2010E

PBT before Extraordinary Items 3,595 25,495 71,370 92,196110,974

Add : Depreciation 361 571 828 1,090 1,380

Interest 1,685 3,076 1,575 0 0Less : Direct Taxes Paid 1,668 6,058 11,807 21,01230,951(Inc)/Dec in WC -16,545 -67,432 10,738 117,64224,551CF from Operations -12,572 -44,348 72,704 189,917

105,954

(Inc)/Dec in FA -7,194 -25,400 -65,817 -29,546-39,884(Pur)/Sale of Investments -7,900 6,193 0 0 0CF from Investments -15,094 -19,207 -65,817 -29,546

-39,884(Inc)/Dec in Networth -767 13,044 76,072 -6,819-6,819(Inc)/Dec in Debt 31,644 58,008 -64,328 -35,000 0Less : Interest Paid 1,685 3,076 1,575 0 0Dividend Paid 0 2,216 13,580 16,23018,245CF from Fin. Activity 29,192 65,760 -3,411 -58,049

-25,065

Inc/Dec of Cash 1,526 2,205 3,476 102,321

41,005

Add: Beginning Balance 424 1,950 4,155 7,631109,952Closing Balance 1,950 4,155 7,631 109,952150,957

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BALANCE SHEET

Y/E MARCH 2006 2007 2008 2009 2010E

Equity Capital 379 3,059 3,408 3,408 3,408Preference Capital 0 9,498 0 0 0Reserves 9,123 27,115 158,506 206,644 261,606

Net Worth 9,502 39,672 161,914 210,052 265,014

Loans 41,320 99,328 35,000 0 0

Capital Employed 50,967 139,279 196,914 210,052 265,014

Goodwill 8,489 8,935 8,935 8,935 8,935Gross Fixed Assets 13,023 17,787 38,118 69,840 99,793Less: Depreciation 1,891 2,412 3,240 4,330 5,710

Net Fixed Assets 11,132 15,375 34,878 65,510 94,083

Capital WIP 5,911 26,497 71,983 69,806 79,738Investments 8,300 2,107 2,107 2,107 2,107

Curr. Assets 35,604 128,794 149,346 159,542 185,831Inventory 16,409 57,006 40,342 23,752 9,329Debtors 6,580 15,195 14,669 14,956 16,523Cash & Bank Balance 1,950 4,155 7,631 109,955 150,964Loans & Advances 10,642 52,371 86,703 10,879 9,014

Current Liab. & Prov. 18,469 42,429 61,400 86,914 96,745

Net Current Assets 17,135 86,365 87,946 72,628 89,086

Application of Funds 50,967 139,279 196,914 210,052 265,014

dlf projects r

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