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Dewan Housing Finance Corporation Ltd.

BSE: 511072 Sector: Financials
NSE: DHFL ISIN Code: INE202B01012
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OPEN 606.00
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VOLUME 808781
52-Week high 651.30
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P/E 17.49
Mkt Cap.(Rs cr) 19,122
Buy Price 609.85
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OPEN 606.00
CLOSE 603.05
VOLUME 808781
52-Week high 651.30
52-Week low 214.20
P/E 17.49
Mkt Cap.(Rs cr) 19,122
Buy Price 609.85
Buy Qty 200.00
Sell Price 0.00
Sell Qty 0.00

Dewan Housing Finance Corporation Ltd. (DHFL) - Director Report

Company director report

Dear Members

The Board of Directors of your Company take pleasure in presenting the standalone andconsolidated reports on the operational and business performance along with the auditedfinancial statements for the financial year ended March 31 2017.

KEY FINANCIALS

The financial performance of the Company for the financial year ended March 31 2017is summarized below:

(Rs. in crore)

Particulars Standalone Consolidated
2016 - 17 2015 - 16 2016-17 2015-16
Gross Income 8857.23 7299.99 9615.64 7839.92
Less: Interest 6653.61 5490.03 6674.37 5491.95
Overheads & Provisions 777.93 683.49 1477.01 1197.24
Depreciation 23.30 24.30 43.46 29.84
Profit Before Tax and Exceptional item 1402.39 1102.17 1420.80 1120.90
Add: Exceptional item 1969.43 - 1855.45 -
Profit after Exceptional item and Before Tax 3371.82 1102.17 3276.25 1120.90
Less: Provision for taxation 475.37 372.97 479.90 376.75
Profit After 2896.45 729.20 2796.35 744 .15
Add: Net share of profit from Associates - - 9.95 5 .15
Add: Balance brought forward from the previous year 643.68 575.56 731.89 639.74
Net Gain on dilution of Associate - - 3.45 3.93
Surplus available for appropriations 3540.13 1304.76 3541.64 1392.97
Appropriations
Transferred to Statutory Reserve under Section 36(1) (viii) of the Income Tax Act 1961 read with Section 29C of National Housing Bank Act 1987 580.00 180.00 580.00 180.00
Transferred to General Reserve 200.00 200.00 200.00 200.00
Transferred to Debenture Redemption Reserve (DRR) 1170.00 - 1170.00 -
Dividend for Earlier Year - 0.02 - 0.02
Interim Dividend(s) 31.30 175.07 31.30 175.07
Proposed Equity Dividend - 58.36 - 58.36
Tax on Dividend 6.37 47.63 6.37 47.63
Adjustment pursuant to capital reduction scheme - - 270.18 -
Balance carried over to Balance Sheet 1552.46 643.68 1283.79 731.89
Total 3540.13 1304.76 3541.64 1392.97
Earnings Per Share
Basic (in Rs.) 95.76 25.00 92.78 25.69
Diluted (in Rs.) 95.44 23.10 92.47 23.73

Appropriations from Net Profit are as detailed in the table given above

TRANSFER TO RESERVES

During the financial year under review your Company transferred Rs. 200 crore to theGeneral Reserve and Rs. 580 crore to the Statutory Reserve under Section 36(1)(viii) ofthe Income Tax Act 1961 read with Section 29C of National Housing Bank Act 1987 out ofthe amount available for appropriation and an amount of Rs. 1552.46 crore is proposed tobe retained in the Profit and Loss account.

National Housing Bank vide circular No. NHB (ND)/DRS/Policy Circular 65/2014-15 datedAugust 22 2014 has clarified that deferred tax liability (contingent upon Company'swithdrawal of Section 36(1) (viii) of Income Tax Act reserves leading to tax liability)in respect of opening balance under special reserve as at April 1 2014 may be adjustedfrom free opening reserves of the Company over a period of 3 years in the ratio of25:25:50 respectively. Accordingly the Company has proportionately adjusted its openingreserves with an amount of Rs. 83.23 crore as contingent deferred tax liability during theyear and unamortized amount against the same is Nil. Deferred Tax Liability on currentyear special reserve has been charged to Statement of Profit & Loss amounting toRs.39.46 crore.

PERFORMANCE

Your Company's inception 33 years ago was based on the fundamental necessity ofenabling home ownership for customers in the Lower and Middle Income [LMI] andEconomically Weaker Sections (EWS) segments. A journey of over three decades and anincreasing awareness at national level on the need for promoting affordable housing havetogether placed your Company in a strong position today. It stands tall as one of India'slargest housing finance companies working towards its mission of reaching out to millionsof customers and helping them fulfill their dreams of owning a home.

During the last financial year the Government of India took several noteworthy stepsto build a conducive environment for growth of the affordable housing sector which hascreated a strong momentum for your Company to fulfill its vision and goals.

Your Company has been swift and agile to leverage these growth enablers andopportunities. During the financial year under review your Company has reported robustperformance witnessing a steady increase in revenues and profits. A key aspect of yourCompany's industry position and operating performance has been its emergence as acomprehensive financial services provider and continued efforts to broaden its servicesbouquet with a range of loan and deposit products while also offering insurance productsthird party life and general insurance for customers within the LMI EWS segments to helpthem de-risk their families and property in case of any eventualities. Being one of thefew housing finance companies eligible to mobilize fixed deposits from the public yourCompany extends unique fixed deposit schemes tailored to suit the financial needs ofvarious segments.

Your Company continues to expand its extensive network across the country to reach outto every potential customer across Tier II and III towns cities and its peripheralsuburbs. The business vertical strategy adopted for the Company's home loan and non-homeloan businesses has achieved the desired objective of greater business focus andleveraging synergies. Your Company's SME loans business continues to thrive and achievethe desired penetration in medical equipment plant & machinery and property termloans.

Your Company has set a historic trend in the retail debt market through two publicNon-Convertible Debentures issuances during the financial year 2016-17 by raising a recordof Rs. 14000 crore within one month. This has repositioned your Company's borrowingportfolio and generated a much more competitive cost of borrowing.

During the financial year under review your Company has successfully completed thesale of its entire equity stake held in DHFL Pramerica Life Insurance Company Limited(DPLI) [representing 50% equity share capital of DPLI] to DHFL Investments Limited (DIL)a wholly owned subsidiary of the Company for a consideration of Rs. 2000.50 crore. Thetransaction adds Rs. 1969.43 crore to the Company's Net Worth. This also ensures thatyour Company is well capitalised enabling it to pursue its aggressive and ambitious growthplans over the next few years.

Standalone

During the financial year ended March 31 2017 and March 31 2016 your Company madetotal loan disbursements of Rs. 28581.90 crore and Rs. 24202.22 crore respectively. Ason March 31 2017 and March 31 2016 the Gross NPAs as a percentage of the outstandingloans were 0.94% and 0.93% respectively. The net NPAs as a percentage of the outstandingloans were 0.58% in both the financial years 2016 and 2017 which are substantially lowerthan industry benchmarks.

Your Company's strong marketing and distribution network has its presence across 348locations throughout India as of March 31 2017. Besides your Company has its presencethrough its international representative offices in London and Dubai. This year's totalincome was Rs. 8857.23 crore as against Rs. 7299.99 crore during the previous financialyear and total expenditure was Rs. 7454.84 crore compared to Rs. 6197.82 crore duringthe previous financial year. Your Company's Assets under Management (AUM) stood at Rs.83559.92 crore as on March 31 2017 as against Rs. 69523.88 crore in the previousfinancial year.

For the financial year under review the Profit before exceptional item and taxes stoodat Rs. 1402.39 crore as against `1102.17 crore in the previous financial year and Profitafter Tax is at Rs. 2896.45 crore as against Rs. 729.20 crore in the previous financialyear.

During the financial year under review your Company has reported an exceptional profitof Rs. 1969.43 crore which primarily represents sale of the Company's entire equity stakeheld in DHFL Pramerica Life Insurance Company Limited. The Profit after this exceptionalitem and before taxes for the current financial year wasRs. 3371.82 crore

Consolidated

During the financial year under review your Company's total revenue on consolidatedbasis stood at Rs. 9615.64 crore higher than 22.65% in the previous financial year. Theoverall operational expenses for the financial year under review was Rs. 8194.84 croreas against Rs. 6719.02 crore in the previous year. Operating profit before tax andexceptional item improved to Rs. 1420.80 crore as compared to Rs. 1120.90 crore inprevious financial year 2015-16. During the financial year under review your Company hasreported an exceptional profit ofRs. 1855.45 crore on sale of its entire equity stake inDHFL Pramerica Life Insurance Company Limited. The year's Profit afterTaxattributabletotheCompanystandsat with the Ministry of Corporate Affairs. Rs.2806.30 crore as against Rs. 749.30 crore in the previous financial year.

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of yourCompany which have occurred between the end of the financial year of the Company i.e.March 31 2017 and the date of this Board's report i.e. May 3 2017.

DIVIDEND

Your Directors at their meeting held on October 17 2016 had declared interim dividendfor the financial year 2016-17 of Rs. 1/- per equity share on 313028058 fully paid upequity shares of `10/- each of the Company. The Board of Directors at their meeting heldon May 3 2017 have recommended a final Rs. 3/- per equity share for the financial yeardividendof ended March 31 2017 in terms of the Dividend Distribution Policy approved bythe Board of Directors of the Company. Therefore the total dividend for the financialyear 2016-17 aggregates to Rs. 4/- per equity share.

The final dividend payable shall be subject to the approval of the Members of theCompany at the ensuing Annual General Meeting which is scheduled to be held on FridayJuly 21 2017. The total outgo on account of dividend (excluding dividend tax) will be Rs.125.25 crore for the current financial year 2016-17 as against Rs. 233.45 crore in theprevious financial year.

TRANSFER OF AMOUNT TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)

Pursuant to the provisions of Sections 124 and 125 of the Companies Act 2013(erstwhile Sections 205A & 205C of the Companies Act 1956) read with InvestorEducation and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules2016 and amendments thereof the amounts pertaining to dividends/ deposits that remainedunclaimed and unpaid for a period of seven years from the date it became first due forpayment have been transferred from time to time to respective Investor Education andProtection Fund (IEPF) on the due dates and all relevant compliances have been done by theCompany and no claims in this respect shall lie against the Company.

Pursuant to the provisions of erstwhile Investor Education and Protection Fund(Uploading of information regarding Unpaid and Unclaimed amounts lying with companies)Rules 2012 the Company has uploaded the details of unclaimed amounts lying with theCompany as on July 20 2016 (i.e. date of last AGM) on the website of the Company(www.dhfl.) and also filed as per Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 details of unclaimed amounts lyingwith the Company as on March 31 2017 was filed with the Ministry of Corporate Affairs.

Unpaid /Unclaimed Dividend

During the financial year under review your Company has transferred unclaimed finalRs. 0.06 crore pertaining to the financial year 2008-09 to the Investor Education andProtection Fund (IEPF) established by the Central Government after the expiry of sevenyears from the date of transfer to unpaid dividend account.

Unclaimed Deposits

During the financial year under review an amount of Rs. 0.12 crore was transferred tothe Investor Education and Protection Fund (IEPF) established by the Central Governmentbeing the amount of deposits along with interest thereon that remained unclaimed andunpaid for a period of seven years from the date it became first due for payment.

Pursuant to Investor Education and Protection Fund Authority (Accounting AuditTransfer and Refund) Rules 2016 [IEPF Rules] your Company had initiated the actions aslaid down under the IEPF Rules and accordingly the communication letters were sent to allthe shareholders of the Company whose dividend had remained unclaimed for past seven yearsand a public notice in this regard was also published in English and Marathi newspapers.

Members and Depositors of the Company are requested to claim their unclaimeddividend/deposit if any and for the purpose may correspond with the Company Secretary orthe Registrar and Share Transfer Agent. Members and Depositors of the Company arerequested to note that any dividend/ deposit remaining unclaimed/unpaid for a period ofmore than seven (7) years will be transferred to the IEPF as per the provisions ofCompanies Act. Members to further note that as per the provisions of Section 124 of theCompanies Act 2013 read with the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 the shares in respect of which thedividend has not been claimed for seven (7) consecutive years shall be transferred to theIEPF.

LENDING OPERATIONS

The sanctions and disbursements of housing and other loans during the financial yearended March 31 2017 were Rs. 39846.28 crore and Rs. 28581.90 crore respectively asagainst Rs. 37608.13 crore and Rs. 24202.22 crore respectively in the previousfinancial year. The Company's cumulative loan disbursement since inception was Rs.131415.84 crore.

Securitisation / Assignment of Loans

During the financial year under review your Company has sold/ assigned multiple poolsof housing loans aggregating to Rs. 3609.15 crore and other non-housing loans aggregatingto Rs. 1388.83 crore. Your Company will however continue to collect the EMIs receivablefrom the borrowers on behalf of the acquirer of the loans and remit the same to thelatter after retaining its portion in terms of the individual agreements.

During the financial year under review your Company has also securitized housing loancontracts amounting to Rs. 885.68 crore by way of Senior Series A1 Pass ThroughCertificate (PTCs) issued by SPVs. These PTCs have been granted the highest rating of AAA(SO) by the external credit rating agencies involved in the process.

Your Company has subscribed to an amount of Rs. 37.31 crore in these Senior A1 PassThrough Certificates (PTCs) in compliance with the Minimum Retention Requirement (MRR)prescribed by RBI in its Guidelines on Securitization issued in 2012. In addition yourCompany has provided Cash Collateral in the form of First Loss Credit Facility (FLCF) as aline of defense for Senior A1 PTC Holders for a cumulative amount of Rs. 68.48 crore asspecified by the respective rating agencies.

Your Company has securitized a pool of home loan contracts with a Mortgage Guaranteeextended by India Mortgage Guarantee Corporation Pvt. Ltd (IMGC). The guarantee from IMGChelps in mitigating credit losses. IMGCs role as a First Loss Provider also helps yourCompany in maintaining an optimum level of Cash Collateral.

Buyout of Home loan pools

During the financial year under review your Company has purchased home loan pools intwo tranches for a cumulative amount of Rs. 308.63 crore. This buyout complies with theReserve Bank of India's norms on Securitization specific to Direct Assignmenttransactions in terms of Minimum Holding Period (MHP) and Minimum Retention Requirement(MRR).

Loan Book

As at March 31 2017 the loan book stood at Rs. 72096.18 crore as against Rs.61775.02 crore in the previous financial year.

SHARE CAPITAL (A) Authorized Share Capital

During the financial year under review pursuant to the approval of the Members of theCompany on February 20 2017 the Authorized share capital was reclassified. TheAuthorized share capital of the Company as at March 31 2017 stands at Rs.8280000000 (Rupees Eight Hundred Twenty Eight Crore only) divided into (i)578000000 (Fifty Seven Crore Eighty Lakh only) equity shares of `10/- (Rupees Ten only)each aggregating to Rs. 5780000000 (Rupees Five Hundred Seventy Eight Crore only); and(ii) 2500000 (Twenty Five Lakh only) non-convertible redeemable cumulative preferenceshares of Rs. 1000/- (Rupees One Thousand only) each aggregating to Rs. 2500000000(Rupees Two Hundred Fifty Crore only).

(B) Issued and Paid-up Share Capital

(1) Equity

The Issued and paid up equity share capital of the Company as at March 31 2017 was Rs.313.15 crore divided into 313152205 equity shares of Rs. 10/- each as compared to Rs.291.80 crore divided into 291797988 equity shares of Rs. 10/- each as at March 312016. The increase was mainly on account of issuance and allotment of following equityshares:

(a) 21230070 (Two crore Twelve lakh Thirty thousand and Seventy) equity shares offace value Rs. 10/- each to Wadhawan Global Capital Private Limited (WGCPL) a promotergroup entity owing to conversion of warrants allotted during the previousfinancialyearupon receipt of balance 75% of the total consideration amount i.e. Rs. 375 Crore as perthe applicable provisions of Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2009 as amended and applicable provisions of theCompanies Act 2013 including rules made thereunder.

(b) 124147 equity shares of Rs. 10/- each upon exercise of options (employee stockappreciation rights) by the eligible employees of the Company pursuant to Dewan HousingFinance Corporation Limited-Employee Stock Appreciation Rights Plan 2015.

Your Company has neither issued any shares with differential voting rights nor anySweat Equity shares during the financial year under review.

(2) Preference Share Capital

During the financial year under review the Members of the Company on February 202017 approved the issuance of Non- Convertible Redeemable Cumulative Preference Sharesamounting to Rs. 750 crore (including the premium amount of Rs. 500 crore) by way of aspecial resolution passed through Postal Ballot. However no preference shares were issuedby the Company during the financial year 2016-17.

RESOURCE MOBILISATION

Your Company's borrowing policy is under the control of the Board. The Company has videspecial resolution passed by means of postal ballot on June 12 2014 under Section180(1)(c) of the Companies Act 2013 authorized the Board of Directors to borrow moneyupon such terms and conditions as the Board may think fit in excess of the aggregate ofpaid up share capital and free reserves of the Company upto an amount of Rs. 100000crore and the total amount so borrowed shall remain within the limits as prescribed byNational Housing Bank.

Your Company continued to use a variety of funding sources to optimize funding costsprotect interest margins and maintain a diverse portfolio which further strengthened itsfunding stability and liquidity needs. Your Company continued to keep tight control overthe cost of borrowings through negotiations with lenders and thus raised resources atcompetitive rates from its lenders while ensuring proper asset liability match.

The twin NCD issuances have not only established a strong yield curve for yourCompany's financial instruments in the market but has also repositioned its borrowingportfolio into a more balanced mix of bank borrowings (41.90%) debt market instruments(41.80%) deposits (8.40%) National Housing Bank (4.00%) and External CommercialBorrowings (3.90%) and a better maturity profile.

The weighted average borrowing cost as at March 31 2017 was 8.83% as against 9.67% inthe previous year.

Your Company's total borrowings amounted to Rs. 81341.24 crore as at March 31 2017as against Rs. 61103.66 crore in the previous year. The Company's Asset-LiabilityCommittee (ALCO) set-up in line with the guidelines issued by NHB monitorsasset-liability mismatches to ensure that there are no imbalances or excessiveconcentrations on either side of the Balance Sheet. The ALCO lays down policies andquantitative limits that involve assessment of various types of risks and shifts in assetsand liabilities to manage such risks and ensures that the liquidity and interest-raterisks are contained within the limits laid down by the Board. Your Company continued toraise longer tenor borrowings in the financial year 2016-17 as well. Another strategyadopted to keep a balanced ALM was to enter into strategic partnership with banks that arekeen on good quality assets and assign long tenor receivables to them at mutuallybeneficial terms.

Public Issue of Non-Convertible Debentures [NCDs]

During the financial year under review your Company made its maiden public issue ofSecured Redeemable Non-Convertible Debentures of Rs. 4000 crore which was subscribed18.65 times of the base issue size of Rs. 1000 crore setting a benchmark in the capitalmarkets. Your Company also made a follow on public issue of Secured RedeemableNon-Convertible Debentures of Rs. 10000 crore which was also subscribed to the extent of6.34 times of the base issue size of Rs. 2000 crore. The proceeds of the aforesaidissuances were utilized for the purpose for which they were raised largely towardsbusiness purposes pre-payment/repayment of high cost borrowings. The outstanding balanceof these Debentures as on March 31 2017 amounts to Rs. 14000 crore.

Non-Convertible Debentures [NCDs] issued on private placement basis

During the financial year under review your Company continued to issue Non-ConvertibleDebentures on private placement basis pursuant to the special resolutions passed by theMembers of the Company and Policy for private placement of Non-Convertible Debentures(NCDs) of the Company formulated as per the guidelines issued by National Housing Bank.

Non-Convertible Secured Redeemable Debentures

During the financial year under review your Company issued Secured RedeemableNon-Convertible Debentures on private placement basis amounting to Rs. 2550.90 crore tobanks and financial institutions. The outstanding balance of these Debentures includingaccrued premium on zero coupon NCDs as on March 31 2017 amounts to Rs. 14829.52 crore.The proceeds of the aforesaid issues were utilized for making disbursement to meet thehousing finance requirements of the borrowers as well as for general corporate purposes.

Non- Convertible Subordinated Unsecured Debentures

During the financial year under review your Company raised Rs. 400 crore through issueof Non- Convertible Subordinated Unsecured Debentures on private placement basis. As atMarch 31 2017 your Company's outstanding subordinated debts were Rs. 1506.80 crore. Thedebt is subordinated to present and future senior indebtedness of your Company.

Non- Convertible Perpetual Unsecured Debentures

During the financial year under review your Company has raised Rs. 475 crore throughissuance of Non-Convertible Perpetual Unsecured Debentures. The outstanding as at March31 2017 amounts to Rs. 660.70 crore.

Debenture Trustee Agreement(s) were executed in favour of Catalyst Trusteeship Limited(formerly known as GDA Trusteeship Limited) for twin Public issues of NCDs. DebentureTrustee Agreement(s) were executed in favour of Catalyst Trusteeship Limited (formerlyknown as GDA Trusteeship Limited) and IDBI Trusteeship Services Limited for NCDs issued onprivate placement basis.

During the financial year under review the interest on Non- Convertible Debenturesissued by way of public issue and on private placement basis were paid by the Company ontheir respective due dates and there were no instances of any interest amount which werenot claimed by the investors or not paid by the Company after the date on which the samebecame due for payment.

Your Company being Housing Finance Company is exempted from the requirement of creatingDebenture Redemption Reserve (DRR) in case of privately placed debentures. Therefore noDRR has been created for the Debenture issued by the Company on private placement basis.However as per the relevant provisions of Companies Act 2013 and Securities and ExchangeBoard of India (Issue and Listing of Debt Securities) Regulation 2008 your Company hascreated a Debenture

Redemption Reserve (DRR) for Secured Redeemable Non-Convertible Debentures issued byway of Public issue. As at March 31 2017 DRR stands at Rs. 1170 crore.

Disclosure under Housing Finance Companies issuance of Non-Convertible Debentures onPrivate Placement Basis (NHB) Directions 2014

During the financial year under review the Non-Convertible Debentures issued onprivate placement basis were paid/ redeemed by the Company on their respective due datesand there were no such instances of any Non-Convertible Debentures which have not beenclaimed by the investors or not paid by the Company after the date on which theNon-Convertible Debentures became due for redemption.

Loans from Banks

As part of its liability management your Company endeavors to diversify its resourcebase in order to achieve an appropriate maturity structure and minimize the weightedaverage cost of borrowed funds. Your Company continued to leverage on its long termrelationship with banks and thus tied up fund based working capital limit to Rs. 12545crore as at the end of financial year. Your Company also raised additional term loans frombanks to the extent of Rs. 8975 crore during the financial year 2016-17 at competitiverates available in the market and continued its focus on domestic sources.

However the twin Public issue of NCDs have helped your Company to diversify itsborrowing profile and reduce dependency on wholesale borrowings particularly from banks.

The share of bank borrowings in the total borrowings in the current financial year camedown to 41.90% from 52.70% in the previous financial year.

Deposits

Your Company being a deposit accepting Housing Finance Company registered withNational Housing Bank(NHB) is governed by the provisions of the Housing Finance Companies(NHB) Directions 2010 as amended and other directions regulations and circulars issuedby NHB.

Retail fixed deposits form an integral source of funding for your Company and theCompany has taken several initiatives to make these deposits available throughout thecountry. As a result the fixed deposit portfolio of your Company has seen a robust growthduring the financial year 2017. The total deposits grew by 34.22% to Rs. 6768.65 crore ason March 31 2017. During the financial year under review your Company added 32928 newdeposit accounts taking the total number of depositor accounts to 265156. This is asignificant of increasing customer confidence in your Company.

As of March 31 2017 10183 depositors who did not claim the deposits (along withinterest due thereon) were aggregating to Rs. 76.74 crore. Depositors have been intimatedregarding the maturity of their deposits with a request to either renew or claim theirmatured deposits. Fixed Deposits accepted by the Company are secured appropriately to theextent of floating charge on approved securities and bank deposits created by way of TrustDeed as per the directions/ guidelines issued by the National Housing Bank.

Your Company sends appropriate reminders to the depositors after the due date ofmaturity to claim their unclaimed repayment amount of deposits alongwith the interest duethereon.

Refinance from National Housing Bank (NHB)

During the financial year under review your Company has been granted a sanctionamounting to Rs. 700 crore under the NHB's refinancing schemes for HFCs. In the financialyear 2016-17 your Company availed Rs. 2200 crore refinance from NHB which included Rs.1500 crore sanctioned during the previous financial year.

Commercial Papers

As at March 31 2017 Commercial Papers outstanding amount stood at Rs. 2995 crore.

External Commercial Borrowings (ECBs)

During the financial year under review your Company has availed External CommercialBorrowings (ECBs) amounting to Rs. 1007.59 crore under two differentfacilities (a) an ECBfacility of USD 130mn (Rs. 874.15 crore) in the form of a syndicated loan facility (b) anECB of USD 20mn (Rs. 133.44 crore) from DEG-Deutsche Investitions- undEntwicklungsgesellschaft mbH Germany. The ECBs were raised under the Low CostAffordableHousing Scheme of the Reserve Bank of India (RBI). Both the subject ECBs have amaturity of five years. According to the provisions of the RBI guidelines theseborrowings have been swapped into rupees for the entire maturity by way of principal onlyswaps.

In terms of ECB Master Circular guidelines issued by RBI the proceeds of the subjectECBs have been utilised for financing the prospective owners of low cost affordablehousing units. Low cost affordable housing units have been defined as units where theproperty cost is up to Rs. 30 lakh the loan amount is capped at Rs. 25 lakh and thecarpet area does not exceed 60 square metres.

SECURITY COVERAGE FOR THE BORROWINGS

The security details of the aforesaid secured borrowings made by the Company arementioned at Note No. 6 in the Notes to accounts forming part of the audited (standalone)financial statements for the financial year ended March 31 2017.

CREDIT RATINGS

The Company's borrowings enjoy the following Credit Ratings:

Nature of borrowing Rating / Outlook
CARE Brickworks ICRA CRISIL
Short-Term Debt / Commercial Paper - - ICRA A1+ CRISIL A1+
Public (fixed) deposits/ Short Term Deposits CARE AAA (FD); Stable BWR FAAA; Stable - CRISIL A1+
Subordinated debt CARE AA+; Stable BWR AAA; Stable - -
NCDs CARE AAA; Stable BWR AAA; Stable - -
IPDIs CARE AA; Stable BWR AA+; Stable - -
Long-term bank loans CARE AAA; Stable - - -
Structured obligations CARE AAA(SO) - ICRA AAA(SO) CRISIL AAA(SO)

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 apart from the loans made guarantee given or securityprovided by the Company in the ordinary course of business are given in the Notes toaccounts forming part of the audited (standalone) financial statements for the financialyear ended March 31 2017.

CAPITAL ADEQUACY

As required under Housing Finance Companies (NHB) Directions 2010 [NHB Directions2010] your Company is presently required to maintain a minimum capital adequacy of 12% ona stand-alone basis. The following table sets out the Company's Capital Adequacy Ratios asat March 31 2015 2016 and 2017:

Particulars As on March 31
2017 2016 2015
Capital Adequacy Ratio 19.12% 16.74% 16.56%

The Capital Adequacy Ratio (CAR) of your Company was at 19.12% as on March 31 2017 ascompared to the regulatory requirement of 12%.

In addition the NHB Directions 2010 also requires that your Company transfers minimum20% of its annual profits to a reserve fund which the Company has duly complied with.

NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY

Your Company adhered to the prudential guidelines for Non-Performing Assets (NPAs)under the NHB Directions 2010 as amended from time to time. The Company did notrecognize income on such NPAs and further created provisions for contingencies on standardas well as non-performing housing loans and property loans in accordance with the NHBDirections 2010. The Company has also made additional provisions to meet unforeseencontingencies. The following table set forth Company's gross NPAs net NPAs cumulativeprovisions and write-offs for the periods indicated:

(Rs. in crore)

Particulars As of March 31
2017 2016 2015
Gross Non-Performing Assets 678.45 573.07 485.05
% of Gross NPA to Total Loan Portfolio 0.94% 0.93% 0.95%
Net Non-Performing Assets 419.43 361.02 345.95
% of Net NPA to Total Loan Portfolio 0.58% 0.58% 0.68%
Total cumulative provision- loans and other assets 714.19 583.02 430.15
Write-off 87.49 21.46 6.20

Recovery & Collections

The Securitization and Reconstruction of Financial Assets and Enforcement of SecurityInterest Act 2002 (SARFAESI Act) has proved to be a useful recovery tool and the Companyhas been able to successfully initiate recovery action under the provisions of this Actagainst the defaulting borrowers. The Company has taken physical possession of the securedassets of some of the defaulters and the same are being auctioned as per the process laiddown under the SARFAESI Act and the rules framed thereunder.

In order to prevent frauds in loan cases by mortgaging the same property with multiplelenders the Government of India has set up Central Registry of Securitization AssetReconstruction and Security Interest of India (CERSAI) under Section 20 of the SARFAESIAct. Your Company has been filing requisite particulars of mortgaged properties withCERSAI as per the prevailing guidelines issued by CERSAI.

INVESTMENTS

The Investment Committee constituted by the Board of Directors is responsible forapproving investments in line with the policy and limits as set out by the Board. Theinvestment policy is reviewed and revised in line with the market conditions and businessrequirements from time to time. The decisions to buy and sell upto the approved limitdelegated by the Board are taken by the Chairman & Managing Director who is assistedby Senior Executives of the Company. The investment function is carried out primarily tosupport the core business of housing finance to ensure adequate levels of liquidity and tomaintain investment in approved securities in respect of public deposits raised as per thenorms of National Housing Bank. Considering the time lag between raising of resources andits deployment the surplus funds are generally being parked with liquid fund schemes ofmutual funds bonds and short term deposits with banks. During the financial year underreview your Company earned Rs. 470.88 crore by way of income from mutual funds &other treasury operations and Rs. 236.59 crore by way of interest on bonds (including SLRbonds) and deposits placed with banks.

As per National Housing Bank guidelines Housing Finance Companies are required tomaintain Statutory Liquid Ratio (SLR) in respect of public deposits raised. Currently theSLR requirement is 12.50% of the public deposits. As at March 31 2017 your Company hasinvested Rs. 425.30 crore (book value - gross) in approved securities comprising ofgovernment securities government guaranteed (State and Central) bonds State DevelopmentLoans and by way of bank deposits for Rs. 430.84 crore. It is being maintained within thelimits prescribed by National Housing Bank.

SUBSIDIARIES JOINT VENTURE AND ASSOCIATE COMPANIES

As on March 31 2017 your Company has two wholly owned subsidiaries three jointventure(s) and four associate companies. The Board of Directors reviewed the affairs ofall the subsidiaries joint venture(s) and associate companies.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 your Companyhas prepared Consolidated Financial Statements of the Company which forms part of thisAnnual Report. Further a Statement containing salient features of financial statements ofthe subsidiaries joint venture entities and associate Companies in the prescribed formatAOC-1 pursuant to the provisions of the Companies Act 2013 read with the Companies(Accounts) Rules 2014which forms part of this Board's report as “Annexure -1”. The Statement also provides details of performance and financial position of eachof these companies.

In accordance with the provisions of Section 136 of the Companies Act 2013 read withthe applicable rules the audited standalone financial statements the consolidatedfinancial statements and related information of the Company and the audited accounts ofthe subsidiary/ies joint venture entities and associate companies are available on theCompany's website i.e. www.dhfl.com. These documents shall also be available forinspection till the date of the ensuing Annual General Meeting during the business hoursi.e. between 10.00 a.m. to 5.00 p.m. on all working days (except Saturday) at theRegistered Office of the Company.

Highlights of Performance of Subsidiaries

DHFL Advisory & Investments Private Limited (DAIPL)

DHFL Advisory & Investments Private Limited was incorporated as a wholly ownedsubsidiary of the Company in the previous financial year. During thefinancial year underreview DAIPL of made an investment of Rs. 300 crore and acquired 32.88% stake in theequity share capital of the joint venture entity i.e. DHFL Pramerica Asset ManagersPrivate Limited.

The main object of DAIPL is inter-alia to carry on the business of providing allkinds of advisory/consultancy services and fee based intermediation activities and itearned an advisory fees of Rs. 0.05 crore during the financial year ended March 31 2017.

DHFL Investments Limited (DIL)

During the financial year under review your Company incorporated DHFL InvestmentsLimited as its wholly owned subsidiary. The Company made an investment of Rs. 100.05 crorein DIL by way of subscription to 100050000 equity shares of Rs. 10/- each.

During the financial year under review pursuant to receipt of all the regulatoryapprovals your Company on March 31 2017 sold its entire stake in DHFL Pramerica LifeInsurance Company Limited (“DPLI”) (representing 50% of the paid up equity sharecapital of DPLI) to DIL at a fair market value of Rs. 2000.50 crore as determined by aninternationally reputed actuarial consultant. In order to fund the acquisition DIL alsoraised a sum of Rs. 1901 crore from Wadhawan Global Capital Private Limited[“WGC”] (promoter group entity) by way of issue of Compulsorily ConvertibleDebentures [CCDs] convertible into equal number of equity shares of DIL after the expiryof 100 months from the date on which the CCDs were issued and mandatorily to be convertedafter the expiry of 110 months.

Highlights of Performance of Joint Ventures

DHFL Pramerica Life Insurance Company Limited

Your Company had acquired 50% equity stake in DHFL Pramerica Life Insurance CompanyLimited (erstwhile DLF Pramerica Life Insurance Company Limited) (“DPLI”) alife insurance Company registered with Insurance Regulatory and Development Authority ofIndia from DLF Limited in December 2013 and entered into a joint venture withPrudential International Insurance Holdings Limited (“Prudential”). TheCompany's investment in DPLI (including the original cost of acquisition) wasapproximately Rs. 310689296 (Rupees Thirty One Crore Six lakh Eighty Nine Thousand TwoHundred and Ninety Six only). In order to unlock the value of the Company's investment inDPLI with the approval of Board of Directors the Members of the Company and relevantregulatory authorities the entire equity stake held in DPLI was sold to DIL a whollyowned subsidiary at fair market value of Rs. 2000.50 crore determined by internationallyreputed actuarial consultant. Your Company earned a profit Rs. 1969.43 crore on the DPLIstake sale.

As at March 31 2017 the net worth of DPLI stood at Rs. 853.04 crore and itsProfit before tax grew by 21% atRs. 70.42 crore for financial year 2017 as againstRs.58.36 crore for financial year 2016. The Assets under Management of DPLI stood at Rs.2707.4 crore as at March 31 2017 as against Rs. 2071.6 crore as at March 31 2016. DPLIhas presence in 28 states.

DHFL Pramerica Asset Managers Private Limited & DHFL Pramerica Trustees PrivateLimited

During the previous financial year your Company had entered into a joint venture withPGLH of Delaware (a wholly-owned indirect subsidiary of Prudential Financial Inc.)pursuant to which it acquired 50% of the equity share capital of DHFL Pramerica AssetManagers Private Limited (formerly known as Pramerica Asset Managers Private Limitedhereinafter referred to as “DPAMPL”) the Asset Management Company of DHFLPramerica Mutual Fund (formerly known as Pramerica Mutual Fund hereinafter referred to as“DPMF”) and DHFL Pramerica Trustees Private Limited (formerly known as PramericaTrustees Private Limited hereinafter referred to as “DPTPL”) the Trustee ofDPMF. Your Company is registered with Association of Mutual Funds in India (AMFI) videregistration No. ARN - 101515 as AMFI registered Mutual Fund Advisor and undertakes thedistribution of mutual fund products of DPAMPL.

During the financial year under review consequent to the approval of Hon'ble HighCourt of Bombay DPAMPL reduced and consolidated its issued subscribed and paid up sharecapital pursuant to the relevant provisions of the Companies Act 2013.

As at March 31 2017 your Company holds 50% equity stake in DPAMPL (directly 17.12%and 32.88% through its wholly owned subsidiary DAIPL) and DPTPL respectively.

As on March 31 2017 the net worth of DPAMPL stood at Rs. 130.40 crore with aProfit before tax ofRs. 7.65 crore for financial year 2017 as against a loss of Rs. 32.62crore for financial year 2016 and its year to date average Assets under Management grew by20% being in line with the industry growth rate of 26%. DPAMPL has presence in 8 states.

Highlights of Performance of Associate Companies

Aadhar Housing Finance Limited (Aadhar)

Aadhar Housing Finance Limited a housing finance company registered with NationalHousing Bank (NHB) with equity participation from International Finance Corporation (IFC)a member of the World Bank group focuses on providing home loans to the needy in thebackward regions of the country.

During the financial year under review your Company did not subscribe to rights issuemade by Aadhar which resulted in proportionate dilution of the existing shareholdingpercentage of the Company in Aadhar. As a result as on March 31 2017 the percentage ofshareholding of your Company in Aadhar stood at 12.37% of the paid-up equity sharecapital.

As at March 31 2017 the net worth of Aadhar stood at Rs. 224.41 crore and itsProfit before tax grew by 112.93% at Rs. 61.68 crore for financial year 2017 as againstRs.28.96 crore for financial year 2016. The Assets under Management of Aadhar stood at Rs.3183.83 crore as at March 31 2017 as against Rs. 1811.39 crore as at March 312016. Aadhar has presence in 13 states.

DHFL Vysya Housing Finance Limited (DHFL Vysya)

DHFL Vysya a housing finance company registered with National Housing Bank (NHB)caters to the lower and middle income segment mostly in the southern regions of thecountry and in two states in the northern region. As on March 31 2017 the percentage ofshareholding of your Company stood at 9.47% of the paid-up equity share capital of DHFLVysya.

As at March 31 2017 the net worth of DHFL Vysya stood at Rs. 153.73 crore andits Profit before tax decreased at Rs. 35.76 crore for financial year 2017 as againstRs.40.01 crore for financial year 2016. The Assets under Management of DHFL Vysya stood atRs. 1807.60 crore as at March 31 2017 as against Rs. 1467.57 crore as at March 312016. DHFL Vysya has presence in 7 states.

The Board of Directors of DHFL Vysya and Aadhar respectively have approved the schemeof amalgamation of DHFL Vysya (Transferee) and Aadhar (Transferor) pursuant to which boththe entities have filed their respective applications for seeking approval foramalgamation in terms of the applicable provisions of Companies Act 2013 with NationalCompany Law Tribunal.

Avanse Financial Services Limited (Avanse)

Avanse Financial Services Limited a non-banking financial company registered withReserve Bank of India is education Loan Company which kindles and supports aspirations ofhigher education in India & overseas and also provides education institution loan.

As on March 31 2017 the percentage of shareholding of your Company stood at 36.78% ofthe paid-up equity share capital of Avanse.

As at March 31 2017 the net worth of Avanse stood at Rs. 140.25 crore and its Profitbefore tax grew by 121.71% atRs. 5.72 crore for financial year 2017 as against Rs. 2.58crore for financial year 2016. The Assets under Management of Avanse stood at Rs.982.25 crore as at March 31 2017 as against Rs. 529.63 crore as at March 31 2016. Avansehas presence in 13 Locations.

DHFL Ventures Trustee Company Private Limited (DHFL Ventures)

DHFL Ventures is a Company which acts as a trustee company of venture capital funds andalternative investment funds.

During the financial year under review your Company has transferred its entire equitystake held in DHFL Ventures to its wholly owned subsidiary i.e. DHFL Investments Limitedat face value.

As at March 31 2017 the net worth of DHFL Ventures stood at Rs. 0.054 crore and itsProfit before tax wasRs. 0.02 crore for financialyear 2017. The total assets of DHFLVentures stood at Rs. 0.08 crore as at March 31 2017 as against Rs. 0.072 crore as atMarch 31 2016.

INFORMATION TECHNOLOGY

Your Company's technology transformation programme (Tech2.0) in association with IBM isa journey towards digitalby10.62% transformation to enhance customer and employeeexperience. In addition your Company is exploring advanced technological solutions in theareas of data analytics mobility and cloud.

This programme will help your Company to align its technology landscape to meet itsevolving business needs improve its customer centricity and will enable faster decisionmaking through automation and analytics.

HUMAN RESOURCES

Your Company today is a valued employer brand with a compelling employee valueproposition. Your Company consistently focuses on talent acquisition and retention toensure sustainable growth. Your Company's initiatives are aligned with its overall missionand strategy. It has adopted new technologies and has implemented employee-centricpolicies and practices to strike a balance between business needs and individualaspirations.

Your Company significantly invests in professional development and provides careerdevelopment opportunities for its employees. A robust development framework and a blend ofclassrooms with on-line and on-the-job training aligned to the Company's businessobjectives and career path of individuals provides the employees with opportunities toexcel in their work and be well equipped for future roles.

The leadership competency framework enables your Company to identify potential leaders;and ensures that your Company has a ready talent pool to take up next level leadershiproles.

To meet its ever-growing need for talent especially in Tier II and Tier III townscities and its peripheral suburbs your Company has also tied-up with leading academicinstitutions to offer skill development opportunities for deserving candidates with theCompany. While these initiatives provides your Company with good talent it also helps itto give back to society in the form of generating more employment.

Your Company has put in place an open transparent and meritocratic culture that helpstalent perform grow and stay in the Company. Your Company works on the belief that everygreat workplace is marked by synergistic and gender diverse teams and a diverse workplaceis benefitted with improved business performance better corporate governance and strongerbrand image.

In an ongoing effort to being one of the most preferred employers in the financialservices space your Company will continue to significantly invest in employee engagementtalent and leadership development and best-in-class processes and policies. Theoverriding objective is to foster a culture of excellence and ownership.

Learning and Development

Your Company's Learning & Development Team (L&D Team) is responsible forproviding learning solutions to every role within the Company by designing comprehensivetraining framework to match the dynamic and ever evolving business trends.

Your Company has created stronger depth and focus in its skill building efforts. It hasbeen able to support professional development and empower employees to deliver improvedquality of service through its training intervention and motivating them to perform withrenewed vigor and enthusiasm. Teaching expertise has been nurtured in-house in theform of dedicated trainers facilitators content developers as well as subject matterexperts from business teams.

During the financial year under review training was imparted to 2745 on rollemployees and 1741 off roll employees covering a wide range of functional areasincluding sales skill development programs credit analytical skills appraisaltechniques fraud & risk management. “Organization Orientation” theexclusive monthly induction program for the new recruits is conducted to give an overallview of the Company's vision and mission. Similarly programs based on soft skills andmonitoring techniques were also conducted and 953 employees were covered.

In keeping with its importance and in compliance with National Housing Bank normstrainings on KYC & AML Policies were also imparted at all levels within theorganization. External training programs and cross functional exposures were utilized toprovide an extra edge to employees for continuous and employment and better performancethrough learning and job experience. To leverage the internal strength of L&D Teamonly 2.33% of trainings were fully outsourced.

Your Company has partnered with the best in class leadership trainers of the countryfor corporate breakthrough workshop for key position holders and business managers. Tostudy the impact of training your Company engages leading trainers from the industry tobenchmark Company's skills and for analyzing the same with focus on measuring andimproving employee engagement and learning quotient. Taking concrete steps based on thestudy findings is helping the organization in building a stronger and more engagedworkforce. Customer focus remains at the core of all L&D initiatives.

Your Company's Human Resources initiatives and L&D systems are designed to ensurean active employee engagement process leading to better organizational capability andvitality for maintaining a competitive edge and in pursuing its ambitious growth plans.

EMPLOYEE REMUNERATION

(A) The ratio of the remuneration of each director to the median employee'sremuneration and other details in terms of Section 197(12) of the Companies Act 2013 readwith Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended by the Companies (Appointment and Remuneration of ManagerialPersonnel) Amendment Rules 2016 forms part of this Board's report as“Annexure-2”.

(B) The statement containing particulars of employees as required under Section 197(12)of the Companies Act 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended by the Companies(Appointment and Remuneration of Managerial Personnel) Amendment Rules 2016 forms part ofthis Board's report. However as per first proviso to Section 136(1) of the Act and secondproviso of Rule 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the Report and Financial Statements are being sent to the Membersof the Company excluding the said statement.

Any Member interested in obtaining a copy of the said statement may write to theCompany Secretary at the Registered Office of the Company.

EMPLOYEES STOCK OPTION SCHEME (ESOS)/ EMPLOYEE STOCK APPRECIATION RIGHTS (ESARS)

Your Company has formulated employee stock option schemes /employee stock appreciationrights plan with an intent to reward the employees of the Company for their performanceand to motivate them to contribute to the growth and profitability of the Company. TheCompany also intends to use these schemes/ plan to retain talent working with the Company.

Your Company has with the approval of Nomination and Remuneration Committee of theBoard of Directors and pursuant to the special resolution passed by the Members of theCompany at the Annual General Meeting held on July 23 2007 formulated threeemployee stock option schemes ESOS - 2008 ESOS - 2009 Plan II and ESOS - 2009 Plan III.The said stock option schemes are in compliance with the provisions of Securities andExchange Board of India (Share Based Employee Benefits) Regulations 2014 (SEBISBEB Regulations). The ESOP 2009 Plan II lapsed on November 25 2015.

During the financial year 2014-15 the Members of the Company approved “DewanHousing Finance Corporation Limited Employee Stock Appreciation Rights Plan 2015”(DHFL ESAR 2015) in accordance with the provisions of SEBI SBEB Regulations and issuanceof stock appreciation rights (‘ESARs') through DHFL ESAR 2015 exercisable into notmore than 5146023 fully paid up equity shares in the aggregate having face value of Rs.10/- each. Pursuant to the subject approval the Nomination and Remuneration Committee onMarch 21 2015 approved Grant I of 1550100 ESARs under DHFL ESAR 2015 to the eligibleemployees of the Company conferring upon them a right to receive equity shares equivalentto the appreciation in the value of the shares of the Company. Consequent to the bonusshares issued by the Company in the ratio of 1:1 during the previous financial year thetotal number of ESARs also increased in the same ratio.

During the financial year under review the Company has allotted from time to time124147 equity shares of Rs. 10/- each on exercise of 347200 ESARs to the eligibleemployees under Grant I of DHFL ESAR 2015.

During the financial year under review Nomination and Remuneration Committee onNovember 17 2016 approved Grant II of 2081545 ESARs under DHFL ESAR 2015 to theeligible employees of the Company conferring upon them a right to receive equity sharesequivalent to the appreciation in the value of the shares of the Company The Company'sNomination and Remuneration Committee of the Board of Directors inter-alia administersand monitors the Employee Stock Option Schemes/ Employee Stock Appreciation Rights Plansof the Company in accordance with SEBI SBEB Regulations. There has been no variation inthe terms of the options/ESARs granted under any of these schemes/plan.

The Company has received a certificate confirming that the Stock Options Schemes/Employee Stock Appreciation Rights Plan have been implemented in accordance with SEBI SBEBRegulations and is as per the respective resolutions passed by the Members of the Company.The said certificate would be placed at the ensuing annual general meeting for theinspection by the Members of the Company. The applicable disclosures as stipulated underSEBI SBEB Regulations for the financial year 2016-17 forms part of this Board's reportas “Annexure-3” and in terms of Regulation 14 of SEBI SBEB Regulations the saiddetails are also available on the website of the Company at the URL:http://www.dhfl.com/investors/esos-esar-disclosures/

DISCLOSURE UNDER SUB-SECTION (3) OF SECTION 134 OF COMPANIES ACT 2013 READ WITH RULE8(3) OF THE COMPANIES (ACCOUNTS) RULES 2014

A. Conservation of Energy

Your Company is not engaged in any manufacturing activity and thus its operations arenot energy intensive. However adequate measures are always taken to ensure optimumutilization and maximum possible saving of energy. During the financial year under reviewyour Company has made capital investment of approximately Rs. 0.30 crore at variouslocations towards the installation of energy conservation equipment's such as replacementof CFL (Compact Fluorescent Lamp) with LED (Light- Emitting Diode) lights energy savingAir-conditioners replacement of normal tube lights with T5 lights at the new branches andin the renovated branches. The Company has also installed at 3 locations Solar panelsystems which are used as an alternate source of energy. These initiatives have resultedin power saving on a daily basis. The Company on its lending side actively associates inall programmes and schemes of the Government and NHB in promoting energy efficient homes.

B. Technology Absorption

Your Company actively engages itself towards technology advancements to serve itscustomers better and to create technology friendly environment for its employees which inturn helps them to manage the processes efficiently and economically.

The current technology transformation programme has been initiated to bring theCompany's technology platform to a new level. The programme aims to identify and implementbest-fit solutions for all the processes and functions viz loan origination andmanagement customer relationship management financial accounting and managementcollections management property information management systems business systems(enterprise) integration business intelligence and advanced analytics.

C. Foreign Exchange Earnings and Outgo

There were no foreign exchange earnings during the year.

The information on foreign exchange outgo and expenditure is furnished at Note No. 34in the Notes forming part of the audited (standalone) financial statements for thefinancial year ended March 31 2017.

INSURANCE

Your Company has insured its various properties and facilities against the risk offire theft and other perils etc. and has also obtained Directors' and Officers'Liability Insurance Policy which covers the Company's Directors and Officers (employees inmanagerial or supervisory position) against the risk of financial loss including theexpenses pertaining to defense cost and legal representation expenses arising in thenormal course of business.

Further your Company has obtained money policy to cover “money in safe and tillcounter and money in transit” for the Company's branches and various offices. All thevehicles owned by the Company are also duly insured.

Your Company also has in place a group mediclaim policy for its employees and theirdependent family members group term life and group personal accident policies whichprovide uniform benefits to all the employees.

Your Company acts as a group administrator and is also registered with Insurance andRegulatory Development Authority of India (IRDAI) as a Corporate Agent for distributionand solicitation of life insurance products of the joint venture entity DHFL PramericaLife Insurance Company Limited.

During the previous financial year your Company entered into a Memorandum ofUnderstanding with Cholamandalam MS General Insurance Co. Ltd. (Chola MS) where theCompany serves as group administrators and managers for group health and/or personnelaccident insurance policy. During the financial year 2016-17 your Company also became aCorporate Agent for Chola MS to ensure adequate insurance coverage for the propertiesfinanced during the tenure of the loan your Company also educates its customers inrelation to the insurance products suitable for them. During the financial year underreview Company has obtained a Corporate Agent Composite license bearing registration no.CA0052 from IRDAI.

NATIONAL HOUSING BANK GUIDELINES

The Company has complied with the provisions of the Housing Finance Companies (NHB)Directions as prescribed by National Housing Bank (NHB) and has been in compliance withthe various Circulars Notifications and Guidelines issued by NHB from time to time. TheCirculars Notifications and Guidelines issued by NHB are also placed before the AuditCommittee / Board of Directors at regular intervals to update the Committee/ Board memberson the compliance of the same.

RISK MANAGEMENT

As a housing finance company your Company continues to stay exposed to various risksassociated with lending business including credit risk market risk liquidity risk legalrisks interest rate risk compliance risk and operational risk. Your Company has a verystrong risk management team and a very robust credit operations structure to mitigatethese risks. This is aided by sound technology robust processes and specializedworkforce. Your Company's philosophy is to keep the risk management and underwritingfunctions separate from each other in order to keep the portfolio protected. Thesesustained efforts to strengthen the risk framework and portfolio quality have yieldedsignificant few years.

Your Company places emphasis on risk management measures to ensure an appropriatebalance between risk and return. Your Company has taken steps to implement robust andcomprehensive policies and procedures to identify measure monitor and manage risks. Riskmanagement is a Board driven function with the overall responsibility of risk managementassigned to the Risk Management Committee of the Board of Directors. At the operationallevel risk management is assigned to the Asset Liability Management Committee(‘ALCO'). Sensitive financial risks are monitored by the Risk Management Committeeand also by Audit Committee of the Board. Your Company conducts risk profiling on aregular basis for the purpose of self-assessment.

During the financial year under review the Company has setup Risk Containment Unit(RCU) at all major business locations.

This unit is manned with risk specialists who work very actively to minimize bad loansfrom getting into the system. They also do a lot of analysis on bad loans to furtherstrengthen the policies and processes prevalent in the organization.

The Board is also at regular intervals updated on the risk management systems andprocesses.

Your Company has put in place a Business Continuity Plan.

The risk management policies of the Company are reviewed and revised on regular basisto identify and mitigate attendant risks in a proactive manner under the changing businessenvironment.

ASSET LIABILITY MANAGEMENT COMMITTEE (ALCO)

The Asset Liability Management Committee (ALCO) lays down policies and quantitativelimits that involve assessment of various types of risks and shifts in assets andliabilities to manage such risks. ALCO ensures that the liquidity and interest-rate risksare contained within the limits laid down by the Board. The Company has duly implementedthe NHB's Asset Liability Management Guidelines.

CODES AND POLICIES & COMPLIANCES

Your Company has formulated various Policies and Codes in compliance with provisions ofDirections and Guidelines issued by the National Housing Bank (NHB) Companies Act 2013Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 and other applicable laws to ensure high ethical standards in theoverall functioning of the organization. The said Policies and Codes are periodicallyreviewed by the Board of Directors.

The key Policies and Codes as approved by the Board of Directors and the respectivecompliance thereunder are detailed herein below:

Policy on Know Your Customer & Anti Money Laundering Measures

Your Company has a Board approved Policy on Know Your Customer (KYC) & Anti MoneyLaundering Measures (AML) in place and adheres to the said Policy. The said Policy is inline with the NHB Guidelines as issued from time to time.

Your Company has adhered to the compliance requirements in terms of the said policyincluding the monitoring and reporting of cash and suspicious transactions. The Companyfurnishes to Financial Intelligence Unit India (FIU) in the electronic mode informationof all cash transactions of the value of more than Rupees ten lakh or its equivalent inforeign currency and suspicious transactions whether or not made in cash in terms of thesaid Policy. Your Company is registered with FIU vide registration No. FIHFC00010. YourCompany is also following the process as briefed out under the Guidance Note on EffectiveProcess of STRs Detection and Reporting for Housing Finance Sector issued by FinancialIntelligence Unit -India in consultation with the Regulator viz. the National HousingBank (NHB). During the financial year under review KYC & AML Policy was revised fromtime to time to align the same with the circulars issued by the National Housing Bank.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2017/05/ KYC-AML-Policy-3rd-May-2017.pdf

Fair Practice Code

Your Company has in place a Fair Practice Code (FPC) which includes guidelines onappropriate staff conduct when dealing with the customers and on the organization'spolicies vis-a-vis client protection. The FPC captures the spirit of the National HousingBank guidelines on fair practices for Housing Finance Companies. Your Company and itsemployees duly comply with the provisions of FPC.

The said code is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2016/01/DHFL -Fair-Practice-Code.pdf

Policy on Disclosure of Material Events and Information

Your Company has in place Board approved Policy on Disclosure of Material Events andInformation formulated in accordance with Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 to determine the events andinformation which are material in nature and are required to be disclosed to the StockExchanges.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2015/12/Policy-on-Disclosure-of-Material-Events-and-Information1. pdf.

Policy on Preservation of Documents and

Records

Your Company has in place Board approved Policy on Preservation of Documents andRecords formulated in accordance with Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015. The Policy ensures that theCompany complies with the applicable document retention laws preservation of variousstatutory documents and also lays down minimum retention period for the documents andrecords in respect of which no retention period has been specified by any law/ rule/regulation. The Policy also provides for the authority under which the disposal/destruction of documents and records after their minimum retention period can be carriedout.

Code of Conduct for the Board of Directors and the Senior Management Personnel

Your Company has in place Code of Conduct for the Board of Directors and the SeniorManagement Personnel formulated in accordance with Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 which sets forth theguiding principles on which the Company and its Board and Senior Management Personnelshall operate and conduct themselves with multitudinous stakeholders government andregulatory agencies media and anyone else with whom it is connected.

Pursuant to the notification issued by Securities and Exchange Board of India duringthe financial year under review your Company amended the Code of Conduct for its Board ofDirectors and the Senior Management Personnel.

A declaration by Chief Executive Officer with regard to the compliance with the saidcode forms part of this Annual Report.

The said code is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2017/01/Code-of-Conduct-for-the-Board-and-the-Senior-Mgmt- Personnel.pdf

Code of Conduct for Prohibition of Insider Trading

Your Company has in place a Code of Conduct for Prohibition of Insider Tradingformulated in accordance with Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 which lays down the process of trading insecurities of the Company by the employees and the connected persons and to regulatemonitor and report trading by the employees and the connected persons of the Companyeither on his/her own behalf or on behalf of any other person on the basis of unpublishedprice sensitive information.

Code of Practices and Procedures for Fair Disclosure of Unpublished Price SensitiveInformation

Your Company has in place Code of Practices and Procedures for Fair Disclosure ofUnpublished Price Sensitive Information formulated in accordance with the Securities andExchange Board of India (Prohibition of Insider Trading) Regulations 2015 which laysdown the practices and procedures for Fair Disclosure of Unpublished Price SensitiveInformation that could impact price discovery in market for its securities.

The said code is available on the website of the Company at theURL:http://www.dhfl.com/wp-content/uploads/2015/12/DHFL-Code-of-Practices-Procedures-for-Fair-Disclosure-of-UPSI.pdf

Code of Business Ethics (COBE)

Your Company has adopted a Code of Business Ethics (COBE) which lays down theprinciples and standards that govern the activities of the Company and its employees toensure and promote ethical behaviour within the legal framework of the organization.

Whistle Blower Policy (Vigil Mechanism)

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act 2013read with Rule 7 of Companies (Meetings of Board and its Powers) Rules 2014 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 the Company has in place a Whistle Blower Policy which provides for avigil mechanism that encourages and supports its Directors and employees to reportinstances of illegal activities unethical behavior actual or suspected fraud orviolation of the Company's Code of Conduct and Code of Business Ethics. It also providesfor adequate safeguards against victimization of persons who use this mechanism and directaccess to the Chairman of the Audit Committee in exceptional cases.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2016/02/ Whistle-Blower-Policy-Revised.pdf

Prevention Prohibition & Redressal of Sexual Harassment of Women at Workplace

Your Company has in place a Policy on Prevention Prohibition & Redressal of SexualHarassment of Women at Workplace and an Internal Committee has been constitutedthereunder.

The primary objective of the said Policy is to protect the women employees from sexualharassment at the place of work and also provides for punishment in case of false andmalicious representations.

Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 the complaints received thereunder andthe details relating thereto are as follows: (a) Number of complaints received in theyear: 1 (b) Number of complaints disposed of during the year: 1 (c) Number of casespending more than ninety days: Nil (d) Number of workshops or awareness programme againstsexual harassment carried out: During the financial year under review there were variousworkshops and programmes conducted on spreading awareness with regard to Sexual Harassmentat workplace at various locations covering National Office 6 zones 32 regions and 226locations.

(e) Nature of action taken by the employer or district officer: Pursuant to the enquiryinitiated by the Internal Committee in respect of one complaint received during thefinancial year under review basis the evidence/ proof including interrogation withcomplainant office colleagues and defendant no conclusive evidence of sexual harassmentwas found. The Internal Committee recommended that warning be issued to the defendant andthe complainant be transferred to another department or location of the Company.

Comprehensive Risk Management Policy

Your Company is committed to manage its risk in a proactivemannerandhasadoptedastructuredanddisciplinedapproach to risk management by developing andimplementing risk management framework. With a view to manage its risk effectively yourCompany has in Risk Management Policy which covers a formalized Risk Management Structurealongwith other aspects of Risk

Management i.e. Credit Risk Management Operational Risk Management Market RiskManagement and Enterprise Risk Management. The Risk Management Committee of the Board onperiodic basis oversees the risk management systems processes and minimizationprocedures of the Company. During the financial year under review the risk managementpolicy of the Company was revised to align the same with the changing businessenvironment.

Nomination (including Boards' Diversity) Remuneration & Evaluation Policy (NREPolicy)

Your Company recognizes the importance and benefits of having a diverse Board. Itendeavors to ensure diversity on the Board through varied skills experience andbackground gender knowledge and other distinguishing qualities to enhance the overalleffectiveness of the Board which in turn brings in valuable contribution to the Company'sbusiness strategies plans and future growth aspects.

Your Company also believes that the Board shall at all times represent an optimumcombination of Executive and Non- Executive Directors as well as Independent Directors

The Board has thus adopted Nomination (including Boards' Diversity) Remuneration &Evaluation Policy which inter-alia lays down the approach to diversity of the Boardcriteria for identifying the persons who are qualified to be appointed as Directors and/orSenior Management Personnel of the Company alongwith the criteria for determination ofremuneration of Directors KMPs and other employees and their evaluation and includesother matters as prescribed under the provisions of Section 178 of Companies Act 2013and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. During the financial year under review your Company hasamended the NRE Policy to align the same with the regulatory requirements.

Additional details with respect to the said policy are given in the Report on CorporateGovernance forming part of this Annual Report.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2017/06/Nomination-Remuneration-Evaluation-Policy-Revised.pdf.

Policy on Fit and Proper Criteria for the Directors

During the financial year under review your Company has formulated and adopted aPolicy on Fit and Proper Criteria forplacethe a Comprehensive Directors inaccordance with Housing Finance Companies Corporate Governance (National Housing Bank)Directions 2016 which inter-alia lays down the fit and proper criteria of the Directorsat the time for their appointment/ reappointment and on a continuing basis.

Related Party Transaction Policy

Your Company has in place Related Party Transaction Policy as per the provisions ofCompanies Act 2013 read with the rules made thereunder and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 whichdescribes the related party transactions requiring requisite approvals and requirements ofappropriate reporting and disclosure of transactions between the Company and its relatedparties. The said policy also defines the materiality of related party transactions andlays down the procedures of dealing with such transactions.

During the financial year under review the Related Party Transaction Policy wasamended to align the same with the requirements of the amendments made to the relevantprovisions of the Companies Act 2013 and the rules thereunder.

Pursuant to Housing Finance Companies Corporate Governance (National Housing Bank)Directions 2016 the Related Party Transaction Policy of the Company forms part of thisBoard's report as “Annexure - 4”.

The said policy is available on the website of the Company at URLhttp://www.dhfl.com/wp-content/uploads/2017/05/ Related-Party-Transaction-Policy.pdf

Corporate Social Responsibility (CSR) Policy

Your Company has in place Corporate Social Responsibility policy (CSR Policy) as perthe provisions of the Companies

Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014 asamended which inter-alia lays down the guidelines and mechanism for undertakingsocially useful projects for welfare and sustainable development of the community atlarge. As per the provisions of Section 135 of the Companies Act 2013 your Company hasconstituted a Corporate Social Responsibility Committee. The Corporate SocialResponsibility Committee assists the Board in fulfilling its duty towards the communityand society at large by identifying the activities and programmes that can be undertakenby the Company in terms of the CSR Policy of the Company. The composition of the CSRCommittee and its terms of reference are given in the Report on Corporate Governanceforming part of this Annual Report.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2015/11/ Revised-CSR-Policy.pdf

The Annual Report on CSR activities forms part of this Board's report as “Annexure- 5”.

Dividend Distribution Policy

During the financial year under review your Company has formulated and adoptedDividend Distribution Policy in accordance with Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 which intends toensure that a rationale decision is taken with regard to the amount to be distributed tothe shareholders as dividend after retaining sufficient funds for the Company's growth tomeet its long-term objective and other purposes. The Policy also lays down variousparameters to be considered by the Board of Directors of the Company beforerecommendation/ declaration of dividend to the Members of the Company.

The said policy is available on the website of the Company at the URLhttp://www.dhfl.com/wp-content/uploads/2017/05/ Dividend-Distribution-Policy.pdf and formspart of this Board's report as “Annexure - 6”.

Policy for Determining Material Subsidiary

During the financial year under review your Company has formulated and adopted thePolicy for determining Material Subsidiary in accordance with Securities and ExchangeBoard of India (Listing Obligations and Disclosure Requirements) Regulations 2015 whichinter-alia lays down the criteria for determining ‘material' subsidiary(ies) and forensuring compliance with respect to their governance and disclosure requirements.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2016/06/Policy-on-determining-of-material-subsidiary.pdf

Internal Guidelines on Corporate Governance

During the financial year under review your Company has formulated and adopted theInternal Guidelines on Corporate Governance in accordance with Housing Finance CompaniesCorporate Governance (National Housing Bank) Directions 2016 which inter-alia definesthe legal contractual and social responsibilities of the Company towards its variousstakeholders and lays down the Corporate Governance practices of the Company.

The said policy is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2017/05/Internal-Guidelines-on-Corporate-Governance.pdf

Policy on Open Architecture for Retail Insurance Business

Your Company has in place a policy on Open Architecture for Retail Insurance Businessin terms of the Insurance Regulatory and Development Authority of India (Registration ofCorporate Agents) Regulations 2015 which was amended during the financial year. It laysdown the manner of soliciting and servicing insurance products and addresses the manner ofadopting the philosophy of open architecture and its implementation.

Other Policies

Further in order to strengthen the internal procedures and systems and for bettergovernance your Company also has in place various other policies and manuals such asConflict of Interest Policy Information Security Policies Investment Policy Policy forprivate placement of Non-Convertible Debentures (NCDs) Model Code of Conduct forDistributors brokers and intermediaries Business Continuity Plan Asset LiabilityManagement Policy NPA Management Policy Comprehensive Outsourcing Policy and StaffAccountability Policy for ensuring the orderly and efficient conduct of Company'sbusiness.

LISTING OF SHARES OF THE COMPANY

The Equity Shares of your Company continue to remain listed on BSE Limited and theNational Stock Exchange of India Limited.

The Company has paid the listing fees as payable to the BSE Limited and the NationalStock Exchange of India Limited for the financial year 2017-18 on time.

MARKETING AND BRANDING

Your Company through its focused branding and marketing effort has been continuouslyworking towards fulfilling its Founder Chairman's vision of enabling home ownership toevery Indian. Your Company has also strengthened its reach and services especially amongthe Lower and Middle Income (LMI). Your Company believes in handholding the consumer dreamof owning a home of his own.inhisjourneyto fulfil

Therefore your Company in its communication has been portraying itself as a flexiblepartner in making customers dream come true. Thus the Tagline ‘Ghar Jaisa Loan' wasalso created which infers loan according to customer's needs. In its communicationjourney your Company roped in Shah Rukh Khan as its brand ambassador who has played therole of an elder brother/ advisor to the customers. Your Company started advertising in2015 with its brand ambassador by showing the importance of dreaming to buy a house ofone's own (Sapna) and post that pushed the envelope further by voicing the excuses whichpeople give for not buying a house of their own (Bahana). In its latest communicationyour Company has emphasized that the right time to buy a home is now (Home loan kab?).

Your Company has also ensured value driven communication to reinforce the significanceof home ownership across TV print radio digital and outdoor media. Additionally your

Company has leveraged digital media to generate awareness on the nuances of home loansand welfare schemes including the Pradhan Mantri Awas Yojana (PMAY) using digitalcharacters ‘Sharmaji & Vinodji' launched in 2016 as a part of its consumereducation initiative.

AWARDS AND RECOGNITIONS

Your Company has added yet another feather in its cap and kept up its record ofdisplaying commendable performance in the housing finance service sector which isreflected by the awards won by the Company as recognition at various award forums:

“Industry Award” for the excellence in the Home Loan Banking.

It has been recognised as the “Dream Companies to work in Housing FinanceSector” organized by Times Ascent and World HRD Congress.

DHFL Home Loan Dilse Campaign won the 11th Indy's award for the most creative Ad ontelevision in the BFSI sector.

It has won the Marketing Campaign of the year for its “HomeLoanDilSe”Campaign at the Global Marketing Excellence Awards endorsed by World Federation ofMarketing Professional and CMO Asia.

Your Company has won ‘Gold' at the Asia Pacific Customer Engagement Forum &Awards for the Most Admired Customer Engaged Brand.

Your Company has won ‘Gold' at the Asia Pacific Customer Engagement Forum &Awards for Excellence in CSR.

Your Company and Mr. Kapil Wadhawan (Chairman & Managing Director) were honoredwith the India's Greatest Brands and Leaders Award 2015-2016 organized by AsiaOne and URSMedia.

Awarded the Best Housing Finance Company in the Financial Services Sector by CMO Asiaand Stars Group.

“Bahana Campaign” has been awarded the Marketing Campaign of the year in theBFSI Sector presented and endorsed by CMO Asia.

“Bahana Campaign” has been awarded “Marketing Campaign of the Year”in the BFSI Sector at the National Awards for Marketing Excellence endorsed by World CSRday Stars Group and CMO Asia.

“Wealth2Health Fixed Deposit” product awarded the “Brand ExtensionAward” in the BFSI Sector at the National Awards for Marketing Excellence endorsed byWorld CSR day Stars Group and CMO Asia

Your Company has won ‘Gold' at the Asia Pacific Customer Engagement Forum &Awards for its Bahana Campaign.

Your Company has won the Golden Peacock Innovative Product and Service Award 2016 forits innovative “Wealth2Health Fixed Deposit” product.

DISTRIBUTION NETWORK

The distribution network of your Company is designed to reach out to the LMI segmentand tap a growing potential customer base throughout India. Your Company maintains apan-India marketing and distribution network with a presence across 348 locationsthroughout India which includes 181 branches 146 service centers 18 circle/clusteroffices disbursement hubs 1 collection center as at March 31 2017.

Additionally your Company has international representative offices located in Londonand Dubai.

Your Company's network is grouped into circles and clusters located pan-India and isspread over Tier II and Tier III cities town and its peripheral suburbs. Your Companybelieves that its business model allows it to deliver improved turnaround time and toimprove customer satisfaction while maintaining asset quality. The distribution networkincludes direct selling teams (i.e. staff working with us on a contract basis) DirectSelling Agents [DSAs] and other business referral partners.

Direct selling teams work under supervision of the employees of your Company and thepayment for their services is a combination of fixed fee and variable commission based onthe disbursement of loans sourced by them. The majority of the loans are sourced throughthe direct selling teams. Your Company has also entered into tie-ups with a number ofIndian public and private sector banks to provide their customers access to the home loansolutions offered by your Company. The tie-ups with such banks allows your company anaccess to the ally banks' customers and branch networks while providing them with theoption to participate in the loan syndication programs with the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the approval of the Members of the Company at the 32nd Annual GeneralMeeting held on July 20 2016 Dr. Rajiv Kumar (DIN: 02385076) was appointed as anIndependent Director of the Company for a period of five years effective from August 72015.

Pursuant to the approval of the Members of the Company at the 31st Annual GeneralMeeting held on July 23 2015 Mr. Kapil Wadhawan (DIN: 00028528) was re-appointedas the Managing Director (designated as Chairman & Managing Director) of the Companyand as Key Managerial Personnel for a further period of five years w.e.f. October 4 2015and his office was made liable to retire by rotation pursuant to the provisions of theCompanies Act 2013 and rules made thereunder. In accordance with the provisions ofSection 152 of the Companies Act 2013 and Articles of Association Mr. Kapil WadhawanChairman & Managing Director being the longest in office among directors who areliable to retire by rotation retires by rotation and being eligible; offers himself forreappointment at the ensuing Annual General Meeting.

All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under

Section 149(6) of the Companies Act 2013 and the provisions of Regulation 16(1)(b) ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015.

None of the Directors of your Company are related to each other except for Mr. DheerajWadhawan Non-Executive Director who is the brother of Mr. Kapil Wadhawan Chairman &Managing Director of the Company. Brief resume of the Director proposed to bere-appointed nature of his expertise in specific functional areas and names of othercompanies in which he holds Directorship alongwith the Membership/

Chairmanship of Committees of the Board as stipulated under

Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and Secretarial Standard (SS-2) on General Meetings areprovided in the annexure to the Notice of the Thirty Third (33rd) Annual General Meetingbeing sent to the Members along with the Annual Report.

Based on the confirmations received none of the Directors are disqualified for beingappointed/ reappointed as directors in terms of Section 164 the Companies Act 2013.

During the year under review no stock options were issued to the Directors of theCompany.

PERFORMANCE EVALUATION

The Nomination and Remuneration Committee of the Board of Directors has laid down theperformance evaluation and assessment criteria/parameters for the Board (including BoardCommittees) and individual Directors. During the financial year under review theNomination and Remuneration Committee of the Board of Directors in light of the GuidanceNote on Board Evaluation issued by Securities and Exchange Board of India reviewed andrevised the performance assessment/ evaluation criterias. The Independent Directors interms of Schedule IV of the Companies Act 2013 at its separate meeting evaluated theperformance of the Chairman & Managing

Director Non-Executive Director and the Board as a whole. The Nomination andRemuneration Committee carried out the evaluation of every Director's performance and the

Board additionally carried out a formal evaluation of its own performance BoardCommittees namely Audit Committee

Nomination and Remuneration Committee Risk Management

Committee Stakeholders Relationship Committee Corporate

Social Responsibility Committee and Finance Committee and all the individual Directorswithout the presence of the

Director being evaluated. The detailed process and manner of performance evaluationcarried out basis the criteria/ parameters laid down for the purpose has been explained inthe Report on Corporate Governance forming part of this Annual Report.

BOARD MEETINGS

Your Company holds at least four Board meetings in a year one in each quarterinter-alia to review the financial results of the Company and an annual calendar ofmeetings of the Board are finalized well before the beginning of the financial year afterseeking concurrence of all the Directors. All the decisions and urgent matters approved byway of circular resolutions are placed and numbered and noted at the subsequent Boardmeeting. Incase of urgent matters additional Board meetings are held in between thequarterly meetings.

During the financial year 2016-17 seven (7) Board Meetings were convened and held. Theintervening gap between the

Board Meetings was within the period prescribed under the

Companies Act 2013 and the Securities and Exchange Board of India (Listing Obligationand Disclosure Requirements) Regulations 2015. The details of the Board composition itsmeetings held during the year along with the attendance of the respective Directorsthereat are set out in the Report on

Corporate Governance forming part of this Annual Report.

Board Committees

Your Company has a duly constituted Audit Committee as per the provisions of Section177 of Companies Act 2013 and provisions of Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015.

The Board of Directors have constituted five other committees namely Nomination andRemuneration Committee Stakeholders' Relationship Committee Risk Management CommitteeFinance Committee and Corporate Social

Responsibility Committee which enables the Board to deal with specific areas /activities that need a closer review and to have an appropriate structure to assist in thedischarge of its responsibilities.

The Board of Directors had constituted two committees with specific objectives namely- Sub-Committee for Investment in Mutual Fund Sector (which was dissolved by the Board onMay 4 2016) and Allotment Committee (comprising of Independent Directors) for allotmentof warrants convertible into equivalent number of equity shares of Rs. 10/- each to thepromoter group entity (which was dissolved by the Board on

October 17 2016)

The details of the composition of the Audit Committee alongwith that of other Boardcommittees and other details including their respective terms of reference are included inthe Report on Corporate Governance forming part of this Annual Report.

The Audit Committee and other Board Committees meet at regular intervals and ensure toperform the duties and functions as entrusted upon them by the Board.

RELATED PARTY TRANSACTIONS

The Company in terms of the applicable provisions of

Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 obtains prior approval of the Audit

Committee before entering into any related party transaction. Approval of the Board ofDirectors in terms of Section 188 of the Companies Act 2013 is also obtained for enteringinto Related Party Transactions by the Company wherever applicable. A quarterly update onthe related party transactions is provided to the Audit committee and the Board ofDirectors for their review and consideration.

During the financial year under review the Company entered into one material relatedparty transaction the detailed disclosure of the same has been provided in Form AOC -2 asper the requirements of the Companies Act 2013 and rules made thereunder which forms partof this Board's report as “Annexure -7”.

All other related party transactions entered into by the

Company in the ordinary course of business at arm's length basis are mentioned in thenotes to the accounts forming part of the audited (standalone) financial statements forthe financial year ended March 31 2017.

There were however no materially significant transaction(s) entered by the Companywith any of its

Independent directors or senior management personnel or their relatives that may havepotential conflict with the interest of the Company at large.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATOR OR COURT OR TRIBUNALS

and material orders passed by any Therewerenosignificant

Regulator or Court or Tribunal which would impact the going concern status of theCompany and its future operations.

Also there were no penalties imposed on the Company by any regulator (including NHB).

INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY

Your Company has an Internal Audit Department which conducts comprehensive audit offunctional areas and operations of the Company to examine the adequacy of and compliancewith policies procedures statutory and regulatory requirements. Significant auditobservations and follow up actions thereon are reported to the Audit Committee. The AuditCommittee reviews and evaluates adequacy and effectiveness of the Company's internalcontrol environment and monitors the implementation of audit recommendations.

The audit function maintains its independence and objectivity while carrying outassignments. For ensuring independence of audits the Internal Auditor reports directly tothe Audit Committee of Board of Directors. The function also proactively recommendsimprovement in policies and processes and suggests streamlining of controls againstvarious risks.

The Audit Committee and Board of Directors have approved a documented framework for theinternal financial control to be followed by the Company and such policies and proceduresadopted by the Company for ensuring the orderly and efficient conduct of its businessincluding adherence to Company's policies safeguarding of its assets prevention anddetection of frauds and errors accuracy and completeness of the accounting records andtimely preparation of reliable financial information and disclosures. The Audit Committeeperiodically reviews and evaluates the effectiveness of internal financial control system.

SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorsof the Company had appointed Mrs. Jayshree S. Joshi Proprietress of M/s Jayshree Dagli& Associates Practicing

Company Secretaries Mumbai to undertake the Secretarial

Audit of the Company for the financial year 2016-17. The Secretarial Audit Report forthe financial year ended March 31 2017 forms part of this Board's report as“Annexure-8”. The said report does not contain any qualification reservation oradverse remark.

STATUTORY AUDITORS

M/s. Chaturvedi & Shah Chartered Accountants (Firm Registration Number 101720W)were appointed as the

Statutory Auditors by the Members of the Company at the

Thirty Second (32nd) Annual General Meeting held on July 20 2016 to hold office fromthe conclusion of the 32nd Annual General Meeting until the conclusion of the 37th AnnualGeneral Meeting of the Company (subject to ratification of the appointment by the Membersat every subsequent Annual General Meeting) in accordance with the provisions of theCompanies Act 2013.

Based on the recommendation of the Audit Committee the Board of Directors at theirmeeting held on

May 3 2017 recommended the ratification of appointment of M/s. Chaturvedi & ShahChartered Accountants as the

Statutory Auditors of the Company and that the necessary resolution in this respect isbeing included in the notice of the

Thirty Third (33rd) Annual General Meeting for the approval of the Members of theCompany. M/s. Chaturvedi & Shah has furnished written consent and a confirmation tothe effect that they are not disqualified to be appointed as the

Statutory Auditors of the Company in terms of the provisions of Companies Act 2013 andrules framed thereunder.

Notes to Accounts and Auditors Report

The notes to the accounts referred to in Auditors Report are self-explanatory and donot call for any further comments. The Statutory Auditors Report on the financialstatements for the financial year 2016-17 does not contain any qualification reservationor adverse remark.

DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors would like to inform that the audited (standalone) financial statementsfor the financial year ended March 31 2017 are in conformity with the requirements of theCompanies Act 2013 and they believe that the financial statements reflect fairly the formand substance of transactions carried out during the year and reasonably present theCompany's financial condition and results of operations. These financial statements havebeen audited by M/s. Chaturvedi & Shah Chartered Accountants (Firm RegistrationNumber 101720W) the Statutory Auditors of the Company.

Pursuant to the provisions of Section 134(5) of the Companies Act 2013 it is herebyconfirmed that:

(a) in the preparation of the annual accounts for the financial year ended March 312017 the applicable

Accounting Standards had been followed along with proper explanation relating tomaterial departures;

(b) the directors had selected such Accounting Policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2017 and of the profit ofthe Company for that period;

(c) the directorshadtakenproperandsufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act

2013 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities;

(d) the directors had prepared the annual financial statements on a going concernbasis;

(e) the directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

REPORT ON CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 and Housing Finance Companies Corporate Governance(National Housing Bank) Directions 2016 a separate section titled ‘ManagementDiscussion and Analysis' forms part of this Annual Report.

Pursuant to Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section titled ‘Report on CorporateGovernance' forms part of this Annual Report which also includes certain disclosures thatare required as per Companies Act 2013.

The certificate by the Statutory with the conditions of Corporate Governance asstipulated in Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of this Board's report as“Annexure-9”. The said certificate for the financial year 2016-17 does notcontain any qualification reservation or adverse remark.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34 (2) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended a separate sectiontitled ‘Business Responsibility Report (BRR)' forms part of this Annual Report whichdescribes the Company's performance and activities from environmental social andgovernance perspective. The BRR is also available on the website of the Company at URL:http://www.dhfl.com/wp-content/uploads/2017/06/Business-Responsibility-Report-FY-2016-17.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act 2013 read withRule 12 of the Companies (Management and Administration) Rules 2014 the extract of theAnnual Return as at March 31 2017 in the prescribed form MGT 9 forms part of thisBoard's report as “Annexure -10”.

FUTURE OUTLOOK

The affordable housing finance industry is at a very exciting stage. The Government'spolicies and path-breaking initiatives on affordable housing and finance has opened upsignificant growth opportunities for your Company. The environment is greatly supportiveof growth for your Company to expand towards broad basing financial inclusion across thecountry.

The positive industry outlook coupled with favorable macroeconomic indicators continueto set your Company on a high growth trajectory. In an era of accelerated growth yourCompany believes that its rich heritage a well-defined vision and unmatched experience incatering to the Lower and Middle Income [LMI] segment will continue to sharpen itscompetitive advantages. Your Company has embarked upon several new strategic initiativesacross marketing IT which has already started to greater speed of response higherefficiency and stronger market position. Your Company remains steadfast to maintain itsleadership position amongst peers and continue to be regarded as ‘the most trustedpartner of customers in the LMI and Economically Weaker Section segments committed totransforming dreams of home ownership into a reality. Your Company looks forward withgreat excitement to another year of industry-leading growth in financial year 2017-18.

Auditorsconfirmingcompliance ACKNOWLEDGEMENTS

Your Directors wish to place on record their gratitude to the National Housing BankSecurities and Exchange Board of India Insurance Regulatory and Development Authority ofIndia Ministry of Corporate Affairs Registrar of Companies Financial Intelligence Unit(India) the Company's Customers

Bankers and other Lenders Members Debenture holders Trustees Depositors and othersfor their continued support and faith reposed in the Company. The Board also places onrecord its deep appreciation for the dedication and commitment of the employees at alllevels as their hard work co-operation and support had enabled the Company to maintainits consistent growth. The Directors would also like to thank the BSE Limited theNational Stock Exchange of India Limited National Securities Depository Limited CentralDepository Services (India) Limited and the Credit Rating Agencies for their continuedco-operation.

For and on behalf of the Board
Kapil Wadhawan
Chairman & Managing Director
(DIN-00028528)
Place: Mumbai
Dated: May 3 2017