Now, DLF to split into 3 organisational units

Now, DLF to split into 3 organisational units
The Financial Express, January 11, 2010, Page 1

Rajat Guha, Rishi Raj, New Delhi

After deciding to split its parent firm into functional verticals, DLF Ltd has now identified an overall new organisational structure to house them and further sharpen their functioning.

The country’s largest real estate firm will now be broadly divided into three units—Devco, Rentco and the holding firm dealing with corporate functions, according to an internal circular issued by DLF vice-chairman Rajiv Singh.

As reported by FE on December 31, the earlier identified verticals like Gurgaon, Super Metros and Rest of India will be part of Devco, which will incorporate all real estate ventures of the company, while Rentco will take charge of all its rent-yielding assets like offices and malls. Going forward, any rent-yielding asset developed by any of the verticals under Devco will be shifted to Rentco.

The corporate functions vertical will include key jobs like finance, legal, HR, corporate affairs, treasury/investor relations and V-C’s office, including risk management. A new quasi entity will be created called DLF Holdings, which will aggregate the company’s investments in areas such as hotels, clubs, convention centres, DLF Pramerica Life Insurance and asset management, DLF Metro JV, DLF Golf Resorts and PVR.

The corporate team will focus more on framing policies and providing guidance and oversight to ensure uniformity in implementation, the circular has stated. “While the last 12 months have been extremely trying for both DLF and the entire economy, the company has emerged stronger from the crisis and now well-positioned to take advantage of the revival in growth. In this context, we are simplifying our organisation to ensure sharper focus on execution with greater emphasis on robust systems, processes and risk management,” Singh has said while outlining the restructuring.

Devco, Rento and the corporation functions unit will be distinct profit centres with independent, board-managed companies with respective profit and loss accounts, balance sheet, cash flows and governance and compliance. Within Devco, the Gurgaon vertical will develop and manage properties in Gurgaon; Super Metros will manage them in Delhi, Mumbai, western and eastern India; the Rest of India will oversee South (Tamil Nadu, Andhra Pradesh, Kerala and Karnataka) and North (Punjab, Rajasthan and UP, including Noida and Goa.

The entire asset business portfolio of DLF, which now stands integrated into one company — DLF Cyber City Developers Ltd — will be under Rentco and will include offices, malls, utilities/facility management and overtime any other income-yielding business.

Rentco will own the assets on their completion by Devco and will generate further income through leasing, maintenance, signage. Rentco will also ensure financial viability of these projects and closely work with Devco for their execution.