DLF : ANALYSTS MEET TRANSCRIPT Q4-AnnualQ4-AnnualQ4-Annual

"DLF Limited's Analysts/Investor Meet Conference Call"

May 26, 2022

MANAGEMENT:

MR. RAJIV SINGH: CHAIRMAN, DLF LIMITED

MR. DEVINDER SINGH: CO-CEO & WHOLE TIME DIRECTOR, DLF LIMITED

MR. ASHOK TYAGI: CO-CEO & WHOLE TIME DIRECTOR, DLF LIMITED

MR. VISHAL DAMANI: BUSINESS HEAD, DLF LIMITED

MR. VIVEK ANAND: GROUP CHIEF FINANCIAL OFFICER, DLF LIMITED

MR. RAMAKRISHNAN P.: CHIEF TECHNICAL OFFICER & BUSINESS HEAD, DLF LIMITED

MR. SRIRAM KHATTAR: MANAGING DIRECTOR, RENTAL BUSINESS, DLF LIMITED

MR. AAKASH OHRI: CHIEF BUSINESS OFFICER & GROUP ED, DLF LIMITED

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	DLF Limited
	May 26, 2022
Vivek Anand:	On behalf of DLF family, my name is Vivek Anand, I am sure most of you know me. So, I think
	we had a busy day since morning. First of all, I would like to welcome the Expert Analysts
	who've come from different parts of the country today here with us. They have been with us
	since morning. They plan to be with us for the next 2 days, which is today and tomorrow. So, a
	very warm welcome to the Expert Analyst Community. We also have our distinguished Board
	here on our right. Thank you, sir, for being here with us. We have honorable Chairman here, Mr.
	Rajiv Singh. We have the entire leadership team with us today. We have DLF colleagues here
	today with us. So, we have a great opportunity for all of you to really have an interaction. The
	way we propose this session is we want to keep it very informal, right? There is no presentation
	we've planned, I think we've had enough of presentations when we get into quarterly and annual
	result discussion. So, today, there is no presentation. We will encourage you to really ask
	questions. And we'll be happy to take on any questions you may have with regard to our
	performance, with regard to our strategy, with regard to our trends what is happening in the
	industry, with regard to outlook, or any other question you may have. It's a great opportunity for
	all of you to ask questions directly. You've been asking me a lot. But today, it's a chance to really
	directly hear it from the Chairman sir, right? The way we've planned this evening is we will
	have this session now, which will go up to 7 o'clock. Post 7 o'clock, we've kept an hour for fun
	activities. I think we had a busy day since morning. So, we really want to have some fun before
	we have a break. Then we get into drinks and dinner. We plan to finish by 9:30, 10 or depending
	on the energy levels of the group, how much you want to carry on, right? So, I'll just stop here.
	And I think you know everybody on the stage. So, let me start from the right, Mr. Devinder
	Singh, he was here with us today when we went for the new Gurgaon tour. So, he's the CEO and
	the Whole-Time Director of DLF. Then we have Sriram, who is the Managing Director of
	RentCo business. You had a chance to interact with him during the lunch session. Then Ashok
	Tyagi, right. He's again CEO and Whole-Time Director of DLF. Again, you know him very
	well, right, Mr. Singh, right. Then Aakash, again, in the morning, you had a chance to meet him.
	He was there in the new Gurgaon tour. He was there with us. And Vishal Damani, he is the
	Business Head who has joined us recently. And he's the Business Head for Metros, which is
	Delhi and Mumbai market. And then we have R.K. who is our technical head. And again, he's
	joined us recently almost 2 years back, right? So, that's the leadership team here, right, and it's
	time for us to really get going, right. I'll just stop here and just leave the floor to you guys to
	really start firing the questions. Thank you.
Kunal Tayal:	Thank you, team DLF, for the site tour through the day. Just to start off the conversation, I think
	about 18 months back, you all put out a refreshed plan in terms of direction of the company, new
	launches, expansion beyond super luxury, it seems to be working really well. So, if I could, is it
	something that you believe is working well at your end, something you're happy with? Or should
	we think of it as maybe stage 1 of where you want to take DLF to? Any thoughts there.
Aakaash Ohri:	We started off 18 months back, we gave some direction. And yes, as far as your question is
	concerned, I think it's working well. The good part is that today the teams are fully aligned. I
	can say this for every member of the team and the coordination is very good. I think everybody
	is pretty hungry. All across geographies, we've had this business identified, we had residual stock
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	DLF Limited
	May 26, 2022
	that we've completely sold out. Wherever I have been in the last 18 months, one thing common
	that I picked up is there is, why is DLF not here and why are we not launching? And today, I
	think almost 8-10 of you came to me and we had these conversations about Bombay. So, as you
	know, we've given some direction, but across the board, today, I can, I can safely tell you both
	from the point of revenue, the customer relationship management, which we've completely
	transformed, business, you've seen my colleagues on the dais, each one of them is looking at
	their businesses, and of course, they have their vision to grow it. The Chairman has given us his
	direction, his idea of where we need to go. So, overall, I can tell you today that I think looking
	back 18 months, where we stand today, we're in a far better place, far more confident. Some of
	you did see that today in our discussions and complimented us, and thank you for that. And
	going forward, I think the teams, we are also investing heavily in this entire system on
	recruitments. Wherever we see gaps we are bringing in new people. So, you will see, as far as
	going forward for the next at least 3 to 5 years, we are fully aligned and looking forward to the
	business. So, please watch out.
Kunal Tayal:	And maybe just as an extension to that, I think it's been amply clear since the morning, how
	much you invest in the brand and how close that is to you. At some stage, do you think there's
	an opportunity to maybe target affordable and mid segment housing, maybe under a different
	brand name?
Rajiv Singh:	I think we've thought about it quite a bit. And I think the answer is no, we will not pursue that
	opportunity. And it's strictly because it's a very construction intensive activity. And as you're
	well aware, we outsource our construction. The value addition, we can look at in that business
	is low. I think we've already mentioned in our earlier presentations that we are generally focused
	on adding higher margin, both P&L and cash flow to our portfolio. Right now, I think, definitely,
	I don't want to say mid income, but definitely the so-called lower income housing, short of a
	social obligation which we do meet from time to time, is not part of our agenda.
Saurabh Kumar:	Saurabh from JP Morgan. So, quite disappointed to hear your plans on mid income. The question
	essentially follows on your stated strategy of increasing ROE, that's part of your presentation. I
	mean, you've covered 1/3 of your journey in terms of reducing debt. But if you look at the return
	on equity, it's still in the low single digits, still needs to go up. And the only way to my mind it
	goes up is via sales. So, in the absence of not doing mid income, how do you double your sales
	from current levels? That's the first one. And the second one is essentially zero debt still a plan
	or? Or I mean are you happy with your current debt? Thank you.
Rajiv Singh:	It's not if I'm happy, are you guys happy with that. But anyway, frankly, I'll tell you, honestly,
	that I'll answer your second question first, it was an obvious answer. Yes, we are committed to
	bringing our debt to a zero level. So, that does not change. Same time, we're not doing anything
	foolish to achieve it. It's being done in a sensible way, by actually creating value and in cashing
	the value. Our land disposals have now slowed down too far in between for some completely
	strategic reason. If we find we can't do anything, we'll get out of it. But otherwise, we're choosing
	to build upon it, number one. Second, I think this question keeps coming back time and again.
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	DLF Limited
	May 26, 2022
	I'm going to tell you guys, 2, 3 things which I think all of you must know. And first and foremost,
	we are now obliged to follow a new accounting standard. So, there's a lot of lag between what
	we are doing today and what we are reporting today. Our reporting, unfortunately, is of
	something we did many years back. So, when that gets completed it, it hits the books. So, that's
	one thing I think all of you must account for, and in my view, ideally create two models. One,
	what is happening and what second you think is happening. Second is a bit of approximation,
	but it won't be too bad. Secondly, look, the important thing here is, I mean, again, it must be
	understood that in our business, profit is a combination of sale price less cost generated, but a
	very significant number, and more so in companies like ours is increase in underlying value. All
	over the world, it is not only optional, it is mandatory that companies have to mark their portfolio
	to market regularly, quarterly and annually. If you look at any large international real estate
	company, vast, overwhelming bulk of its profits, or God forbid losses, come from the mark-to-
	market. A very small percentage comes from underlying profit, "on operations." So, in our case,
	also, we do and we can't, because the laws don't permit us, sort of officially mark to market. But
	internally, we do look at that, are we adding and generating value to a portfolio or not? I can't
	go into very specific numbers, but I can certainly say that at least we are satisfied that we are
	meeting "high ROE numbers," once we take the totality of our portfolio. Strictly from an
	accounting profit and strictly from a lag accounting profit, ROE numbers will keep improving.
	But to be very honest with you, it will take time and that is not our journey, it will be a resultant
	of our journey, but that is not our journey. So, we won't go out and liquidate our land holdings
	to create synthetic profits to meet a number. We will encash them when we believe we've reached
	a fair value potential and then report it. I think look, to your point, in our case, life changes very
	fast. Our large equity base today possibly is a deterrent to the ROE strategy. But it is also a
	fortress to a bad timing. So, these things change from time to time. We are very, very content
	with our balance sheet, we are very content with our financial strategy, I am not seeing any
	reason to really change it or chase any target for one reason or the other. Doubling of sales as
	you mentioned, I think we have shown a fairly good track record in sales. I do believe growth
	will come in the future. But again, we are not going to chase a target of growth, for the sake of
	growth. If it adds value to our portfolio, we will go for the sale, if it doesn't add value to the
	portfolio as you have seen today, New Gurgaon, maybe here in Camellias also. As a company,
	we don't sort of stop working, we don't become idle. But we like to reinvest and reinvest till we
	believe we can create enough value and then take it to the market. So, that is something I think
	as a strategy. I know it is a little counter cyclical to what people think about today, but we do
	believe our strategy has been vindicated over the last 75 years. And honestly, I do believe it's
	valid for a fair degree more in time to come.
Saurabh Kumar:	Sir, just one follow up on that. On the mid-income piece, sir, the view is just that your
	construction cost with your corporate costs, you just cannot be competitive in that market.
	Because if I analyze your competitors, 30%, 35% keep coming from mid income, even the listed
	guys.
Rajiv Singh:	I think I mentioned clearly, you guys add two things in one word, mid income and affordable.
	So, I've clearly distinguished that. We are not in the lower income housing, say when except
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DLF Limited

May 26, 2022

meeting certain social obligation which we always do. But in the middle income housing today what you went and saw in New Gurgaon, I do believe you went and visited some floors also, in my opinion that is strictly middle income housing. Those apartments are priced at Rs. 1 crore to Rs. 1.5 crore, nice apartments, close to work centers. I think by any yardstick, Rs. 1 crore to Rs.

1.5 crore would be what we consider mid income housing. What I want to tell you guys is what you must remember in this company is that what is our success? Our successes is in taking something which was nothing, it was raw land and taking it up the value curve. We go through the journey. This land here where we are sitting was not high-income housing or super high- income housing, it wasn't made that way. This land where we are sitting had 30-foot ravines here, okay. This land which we are sitting on was bought by us, because people in other parts of

DLF City would not part with their land till we bought this residual "junky" land from them. We bought it, we developed it, we added value to it, and so on and so forth. Our first sale here in this part of thing was in the 3-digit numbers, not even a 4 digit number, okay. Those apartments are still there today, nice apartments, people are very happy living in them. They are 950 -1,000 square feet. And they were sold for I still remember a number under Rs. 10 lakh, okay. That was our success story. So, what I want to tell you guys is, it is not that we don't want to be the mid income housing, it is not that we are not in the mid income housing, but our success is that we don't remain in the mid income housing. We take that product, work hard at it and convert the mid income housing product into a high-income housing. And that is why our customers are happy, that's why we are happy, and that is our real story. So, today, journey always starts at some point. But we take it to, God willing, a slightly higher point. And that's why I said whatever it takes to make New Gurgaon successful, different price points, different product points, we are constantly investing and putting it out. We make decent money at it, no harm in that. But I said our journey is how to take it to better and higher values. So, mid income housing, I think we don't have too much of the stock leftover because luckily, we've graduated in the last 15-20 years, but wherever we have it, and Chandigarh is another example, we are more than active in the upper mid income segment if you want to use that word.

Kunal Lakhan:	This is Kunal from CLSA. Sir, firstly on like, we have clocked very high sales in FY22. So, just
	wanted to get some sense, where do we go from here? And if I go by your new launches plan
	for 23, it looks pretty flat compared to FY22. So, where do we aspire to be in '23? And say what
	kind of growth we plan to achieve over the next 3 to 4 years?
Rajiv Singh:	I don't think we are flat, I don't think we are aspiring to be flat. I think the simple fact is we have
	taken a basket of sort of products in different geographies, at different product points, different
	price points and are bringing them to the market in an organized systematic manner. Sometimes
	approval cycles delay something a little bit here or there, but nothing as such which is completely
	changing the picture. In that context, we are not moderating sales or we're not moderating
	anything. Sales velocity will be depending on how the market is accepting the product. We are
	confident about its acceptance. So, as I said, what you all have to understand is the number of,
	and this is all part of our quarterly published reports, is a number which is in excess of I think
	Rs. 40,000 crore. Now, moot point is does it get translated into sales in X number of years, you
	can divide it by the X number of years. Also, I'd like to say that that's the number we have given
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