DLF Subsidairies

Even after the completion of the Issue, DLF Promoters, along with the
Promoter group entities, controls, directly or indirectly, in excess of
87.43% of outstanding Equity Shares. As a result, Promoters will continue
to exercise significant influence over all matters requiring shareholder
approval, including the composition of our Board of Directors, and also
possess effective veto power with respect to any shareholder action or
approval requiring majority voting. Promoters may take or block actions
with respect to our business, which may conflict with their interests or the
interests of our minority shareholders, such as actions with respect to
future capital raising or acquisitions.
While Promoters and various Promoter group entities have entered into
real estate development related non-compete agreements , there can be
no assurance that the interests of Promoters will be aligned in all cases
with the interests of minority shareholders or the interests of Company.
Furthermore, they have sold and in the future plan to sell some of our
developments to DAL. As of March 31, 2007, DAL owed us Rs. 2,350.9
crore in payment for the purchase of certain commercial properties from
us and had paid Rs. 50.5 crore. The sale arrangements and negotiations
with DAL gives rise to conflicts of interest. Promoters also control certain
other companies that are in the real estate business with which
shareholders may have conflicts of interest.

Promoters are Mr. K P Singh, Mr. Rajiv Singh, Sidhant Housing and
Development Company and Panchsheel Investment Company.

Since Urban Land Ceiling Act limits maximum area of land one company
can acquire in a state within a specified time , DLF group led by KP Singh
floated many group companies . As on June 2010, the number of these
promoter group companies stands at 70. For details check exhibit

Merging Subsidiaries with DLF

DAL was set up to facilitate creation of a monetization platform .

Promoters of DLF were only the facilitators for creation of the
monetization platform and had infused Rs. 50 Cr as equity in DAL and
thereafter facilitated private equity investment in DAL. All profits of DAL
were retained for growth, with just CCPS dividend being paid out to PE
investors. No dividend till date has been paid out to promoters. DLF
continued to be the developer for all properties of DAL enabling it to
leverage the DLF pedigree, ensuring high construction quality and comfort
on continuity to all tenants

DLF-DAL integration as a consolidation exercise of its leased asset

portfolio. This will create
potentially the largest yielding asset portfolio of ~16 mn sq. ft. and
provide DLF with a steady annuity business (DLF’s share will be 60%).
Though, there may be a short-term increase in leverage, this integration
should yield long-term dividends and remove an existing overhang on the
stock. Also there are near-term plans to list DAL .

It is a cashless transaction, where DLF by way of merger/amalgamation of

its wholly-owned subsidiary DLF Cyber City (with leased assets of 6.7 mn
sq. ft.) with Caraf Builders (an investment arm of DLF cofounders that
owns DAL + 3.3 mn sq. ft. of leased assets). The swap ratio for the
integration stands at 60:40 for DLF Cyber City and Caraf, with the
integrated DLF Cyber City issuing fresh shares to the cofounders on
integration. On completion, DLF would own 60% of the integrated entity,
while the balance would be held by the co-founders.

About Caraf Builders and Construction Pvt. Ltd Caraf was incorporated in
March 2006 and is
engaged in the business of acquisition and development of real estate
properties in
India Caraf Builders, incorporated in March 2006, is an investment arm of
KP Singh and family (Promoters of DLF) that, along with its subsidiaries,
owns four rent-yielding properties, two in Gurgaon, one each in Kolkata
and Chandigarh, with total leased area of 3.3 mn sq. ft. and ~96%
economic interest in DAL. DAL owns four SEZs (two in Gurgaon and one
each in Hyderabad and Chennai) with total leased area of 6.4 mn sq. ft. In
all, Caraf brings with it eight rental assets (leased area of ~9.7 mn sq. ft.),
current assets worth
~Rs 2,200 crore and debt to the tune of ~Rs. 2,500 crore.

About DLF Cyber City Developers Pvt Ltd (DCCDL)

It is the largest subsidiary of DLF, wholly owned by the company, focusing

on development and leasing of commercial and retail real-estate
properties. It holds 6.7 mn sq. ft. of space across five commercial
buildings in Gurgaon and two operational malls in Delhi (Emporio and
Promenade). It also has further potential for commercial and retail space
development of approx. 11.8 mn sq. ft. in Gurgaon and Mumbai.

About the Integrated Entity

The new entity would evolve as the rental conglomerate for DLF, 40%
owned by the promoters and the balance by DLF. It would hold
geographically spread leased assets (i.e. Retail + Commercial + SEZs) of
the group, currently approx. 16.4 mn sq. ft. The merged entity is expected
to generate a strong and stable rental annuity flow. The integrated entity
would hold and manage commercial property, lease it to third parties and
monetize when it sees potential value to be exploited.

DLF Ltd. has been setting its house in order. Battered but not beaten by
sluggish demand and its own borrowing excesses, India's largest real-
estate developer in terms of revenues, earnings and market capitalization
is selling off non-core assets, clearing the excess debt off its balance
sheet and has realigned plans to focus on affordable housing that’ll keep
cash flowing in. The company’s game plan is fairly aggressive. By the end
of FY10, the management is confident of bringing net debt down from
Rs.151.6 bn to Rs. 62 bn. To achieve the redemption targets, it plans to
sell its investments in hotels and wind power and exit long gestation
projects. Additionally, the Rs.25 bn received from group company DLF
Asset Limited (DAL) – the primary buyer of commercial properties from
DLF – as part payment of its dues, will also be used to retire debt.

‘
Audit trails of subsidiaries of India’s two largest listed real estate companies are running dry. Annual reports of
DLF shows the accounts of its subsidiary, Silverlink Holdings Ltd, acquired in January 2008 and having total
assets of Rs 2,291.12 crore, have not been comprehensively audited despite the listing requirements of the stock
exchanges.

Incidentally, the DLF subsidiary Silverlink Holding Ltd, in turn, has 74 subsidiaries, 71 of which are incorporated
abroad and hold various properties overseas. “Silverlink Holding Ltd was acquired in January 2008, so we could
not audit the financial statements in the year ending March 2008,” said DLF CFO Ramesh Sanka. “But
subsequently audited accounts are available,” he said.

But the limited review by the audit committee of DLF for the December 2008 quarter makes no mention of any
audit conducted by Silverlink Holding’s auditor for the year ended December 2007. It also does not reflect any
subsequent audit of the company.

“It (Silverlink Holding Ltd) is in 18 countries. It is very difficult to get the audit done for different countries,” Sanka
said. Another official of DLF, asking not to be quoted, said the financial statements of some subsidiaries were not
audited due to the time constraint but “that is not significant since DLF has over 200 subsidiaries.”

“The consolidated financial statements include total assets of Rs 2,291.1176 crore, total revenues of Rs Nil and
total cash flows of Rs 155.7814 crore, of a subsidiary (Silverlink Holding Ltd), acquired in January 2008, which
have not been audited by us or any other auditor,” DLF’s auditor Walker, Chandiok & Co said in its report. “The
same are included based on the unaudited consolidated financial statements as at December 31,.