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DIRECTOR'S REPORT

Dewan Housing Finance Corporation Ltd.

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Market Cap. (₹) 663.74 Cr. P/BV 0.08 Book Value (₹) 252.93
52 Week High/Low (₹) 312/21 FV/ML 10/1 P/E(X) 0.00
Bookclosure 28/09/2019 EPS (₹) 0.00 Div Yield (%) 0.00
Year End :2018-03 

Dear Members,

The Board of Directors of your Company take pleasure in presenting the standalone and consolidated reports on the operational and business performance, along with the audited financial statements for the financial year ended March 31, 2018.

Board’s Report

KEY FINANCIALS

The financial performance of the Company for the financial year ended March 31, 2018, is summarized below:

(Rs, in crore)

Particulars

Standalone Consolidated

2017-18

2016-17

2017-18

2016-17

Gross Income

10,464.45

8,857.23

10,529.04

9,615.64

Less: Interest

7,564.92

6,653.61

7,587.00

6,674.37

Overheads & Provisions

1,115.28

777.93

1,174.90

1,477.01

Depreciation

27.63

23.30

28.44

43.46

Profit before Tax and Exceptional item

1,756.62

1,402.39

1,738.69

1,420.80

Add: Exceptional item*

-

1,969.43

-

1,855.45

Profit Before Tax

1,756.62

3,371.82

1,738.69

3,276.25

Less: Provision for taxation

584.49

475.37

585.49

479.90

Profit after tax

1,172.13

2,896.45

1,153.20

2,796.35

Add: Net share of profit from Associates

-

-

12.45

9.95

Add: Balance brought forward from the previous year

1,552.46

643.68

1,283.80

731.91

Net Gains on dilution of Associate

-

-

35.88

3.45

Surplus available for appropriations

2,724.59

3,540.13

2,485.33

3,541.64

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

275.00

580.00

275.00

580.00

Transferred to General Reserve

200.00

200.00

200.00

200.00

Transferred to Debenture Redemption Reserve (DRR)

-

1,170.00

-

1,170.00

Interim Dividend(s)

94.08

31.30

94.08

31.30

Equity Dividend (Final)

94.07

-

94.07

-

Tax on Dividends

38.30

6.37

38.30

6.37

Adjustment pursuant to capital reduction schemes in JV

-

-

-

270.18

Balance carried over to Balance Sheet

2,023.14

1,552.46

1,783.88

1,283.80

Total

2,724.59

3,540.13

2,485.33

3,541.64

Earnings Per Share

Basic (in Rs,)

37.39

95.76

37.18

92.78

Diluted (in Rs,)

37.09

95.44

36.89

92.47

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

* During the last financial year there was a gain ofRs,1,969.43 crore on account of sale of investment (i.e. stake held in DHFL Pramerica Life Insurance Company Limited, a joint venture entity) which was considered as an exceptional item.

TRANSFER TO RESERVES

During the financial year under review, your Company transferred Rs, 200.00 crore to the General Reserve and Rs, 275.00 crore to the Statutory Reserve under Section 36(1)(viii) of the Income Tax Act, 1961 read with Section 29C of National Housing Bank Act, 1987 out of the amount available for appropriation and an amount of Rs, 2,023.14 crore is proposed to be retained in the Profit and Loss account.

National Housing Bank vide circular No. NHB(ND)/DRS/Policy Circular 65/2014-15 dated August 22, 2014 has clarified that deferred tax liability (contingent upon Company’s withdrawal 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 adjusted from free opening reserves of the Company over a period of 3 years in the ratio of 25:25:50 respectively. Accordingly, your Company has already adjusted its reserves towards deferred tax liability. Deferred Tax Liability on current year special reserve has been charged to Statement of Profit & Loss amounting to Rs, 97.85 crore.

PERFORMANCE

Your Company has always been the flag bearer of the Mission -Housing for All. Your Company since inception is conducting its business towards fulfilling a mission of enabling every Indian citizen more particularly those in Lower and Middle Income (LMI) and Economically Weaker Sections (EWS) to own a house for themselves and their families. Your Company’s powerful communication and reach with this target segment has proved effective in seeding the thought of home ownership and in making them not merely our customers but partners in progress. Towards this your Company has been continuously increasing its footprints in Tier 2 & 3 cities and its peripheral suburbs and has ensured that it is one of the preferred lending partner in this category. This focused approach has ensured sustained growth of your Company to become one of the largest Housing Finance Company in India with an Assets Under Management (AUM) of more than Rs, 1 lakh crore.

By maintaining proactive communication with existing and potential customers and by leveraging on best in class technology and processes for enhanced efficiency, your Company is able to offer a robust customer centric business proposition. To expand business opportunities for growth and profitability your Company also offers other mortgage backed products like Loan Against Property, Loan to SME, Small Business enterprises and Self-employed. Your Company extends loans to developers for Residential Projects with thrust on affordable Home Projects.

The housing industry is showing augmented growth in the affordable housing segment, which has been mainly driven by the Government’s vision of "Housing for All by 2022”. This has also been led by industry building initiatives like Credit Linked Subsidy Scheme (CLSS) under Pradhan Mantri Awas Yojana (PMAY) and doubling of the budget allocation for affordable housing to ' 8 billion. In the financial year under review, your Company was awarded the Best Performing Primary lending institution under CLSS for MIG by My Liveable City and knowledge partner National Housing Bank.

Standalone

During the financial year ended March 31, 2018 and March 31, 2017, your Company made total loan disbursements of Rs, 44,800.31 crore and Rs, 28,581.90 crore, respectively. As on March 31, 2018 and March 31, 2017, the Gross NPAs as a percentage of the outstanding loans were 0.96% and 0.94%, respectively. The net NPAs as a percentage of the outstanding loans were 0.56% and 0.58%, respectively, which are both substantially lower than industry benchmarks.

Total income for the year under review was Rs, 10,464.45 crore as against Rs, 8,857.23 crore during the previous financial year and total expenditure was Rs, 8,707.83 crore, compared to Rs, 7,454.84 crore during the previous financial year. Your Company’s Assets Under Management (AUM) stood at Rs, 1,11,085.83 crore as on March 31, 2018, as against Rs, 83,559.92 crore in the previous financial year.

For the financial year under review, the Profit before taxes stood at Rs, 1,756.62 crore as against Rs, 1,402.39 crore (being the profit before exceptional items and taxes) in the previous financial year and Profit after Tax is at Rs, 1,172.13 crore as against Rs, 2,896.45 crore in the previous financial year (which included an exceptional income of Rs, 1,969.43 crore).

Consolidated

During the financial year under review, your Company’s total revenue on consolidated basis stood at Rs, 10,529.04 crore, higher than 9.50% in the previous financial year. The overall operational expenses for the financial year under review was Rs, 8,790.35 crore, as against Rs, 8,194.84 crore in the previous year. Operating profit before tax and exceptional item improved to Rs, 1,738.69 crore as compared to Rs, 1,420.80 crore in previous financial year 2016-17. The year’s Profit after Tax attributable to the Company stood at Rs, 1,165.65 crore against Rs, 2,806.30 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 your Company, which have occurred between the end of the financial year of the Company, i.e. March 31, 2018 and the date of this Board’s report i.e. May 16, 2018 except as disclosed in this Board’s Report.

DIVIDEND

Your Company has in place a Dividend Distribution Policy formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which intends to ensure that a rationale decision is taken with regard to the amount to be distributed to the shareholders as dividend after retaining sufficient funds for the Company’s growth, to meet its long-term objective and other purposes. The Policy also lays down various parameters to be considered by the Board of Directors of the Company before declaration/recommendation of dividend to the Members of the Company.

In terms of the Dividend Distribution Policy, your Directors at their meeting held on October 16, 2017 had declared interim dividend for the financial year 2017-18 of ' 3 per equity share on 31,36,06,352 fully paid up equity shares of '10 each of the Company. The Board of Directors at their meeting held on April 30, 2018 have also recommended a final dividend of '2.50 per equity share for the financial year ended March 31, 2018. Therefore, the total dividend for the financial year 2017-18 aggregates to ' 5.50 per equity share.

The final dividend payable shall be subject to the approval of the Members of the Company at the ensuing Annual General Meeting which is scheduled to be held on Wednesday, June 27, 2018. The total outgo on account of dividend (excluding dividend tax) will be Rs, 172.49 crore, for the current financial year 2017-18, as against Rs, 125.37 crore in the previous financial year.

The Dividend Distribution Policy is available on the website of the Company at the URL: https://www.dhfl.com/docs/default-source/ investors/dividend-distribution-policy/dividend-distribution-policy-jan-2018.pdf and forms part of this Board’s report as "Annexure - 1”.

AMENDMENT TO THE ARTICLES OF ASSOCIATION

During the year under review, in order to comply with the provisions of SEBI circular no. CIR/IMD/DF-1/67/2017 dated June 30, 2017 and pursuant to and in terms of the provisions of Section 14 of the Companies Act, 2013, the Members of the Company vide a Special Resolution passed by means of postal ballot on November 27, 2017 approved the amendment in the Articles of Association of the Company by way of insertion of a new article for enabling consolidation and re-issuance of debt securities subject to the provisions of the Companies Act, 2013 and the applicable SEBI Regulations.

TRANSFER OF UNCLAIMED DIVIDEND/ DEPOSITS AND SHARES TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)

Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, rules made there under and Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 read with the relevant circulars and amendments thereto, the amount of dividend/deposits remaining unpaid or unclaimed for a period of 7 (seven) years from the due date is required to be transferred to the Investor Education and Protection Fund (IEPF) as constituted by the Central Government.

Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor Education & Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for seven (7) consecutive years are required to be transferred by the Company to the designated Demat account of the IEPF Authority.

The details of the unpaid/unclaimed dividend/deposits and the shares due to be transferred to the IEPF, are also uploaded as per the requirements, on the website of the Company i.e. www.dhfl.com.

Unpaid/Unclaimed Dividend

During the financial year under review, your Company has transferred unclaimed final dividend of Rs, 0.07 crore pertaining to the financial year 2009-10 to the Investor Education and Protection Fund (IEPF) established by the Central Government after the expiry of seven years from the date of transfer to unpaid dividend account.

Unclaimed Deposits

During the financial year under review, an amount of Rs, 0.17 crore was transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government, being the amount of deposits along with interest thereon, that remained unclaimed and unpaid for a period of seven years from the date it became first due for payment.

Members and Depositors of the Company are requested to claim their unclaimed dividend/deposit, if any, and for the purpose may correspond with the Company Secretary or the Registrar and Share Transfer Agent.

Transfer of Shares to IEPF

Pursuant to the provisions of Section 124(6) of the Companies Act, 2013 and the rules made thereunder, the Company has transferred in aggregate 89,647 equity shares of Rs, 10 each to Investor Education and Protection Fund (IEPF) established by the Central Government in respect of which the dividend remained unpaid/unclaimed for a period of seven consecutive years i.e. from 2009-10 till the due date of November 15, 2017 after following the prescribed procedure.

In case your shares, unclaimed dividend or deposits etc. have been transferred to IEPF, you can claim the same by making an application directly to IEPF in the prescribed form under the IEPF Rules which is available on the website of IEPF i.e. www.iepf.gov.in.

LENDING OPERATIONS

The sanctions and disbursements of housing and other loans, during the financial year ended March 31, 2018, were Rs, 65,935.78 crore and Rs, 44,800.31 crore respectively, as against Rs, 39,846.28 crore and Rs, 28,581.90 crore, respectively, in the previous financial year. The CompanyRs,s cumulative loan disbursement since inception was Rs, 1,76,216.15 crore.

Securitisation/Assignment of Loans

During the financial year under review, your Company has sold/assigned multiple pools of housing loans aggregating to Rs, 8,490.08 crore and other non-housing loans aggregating to Rs, 3,005.11 crore. Your Company will, however, continue to collect the Equated Monthly Installments (EMIs) receivable from the borrowers, on behalf of the acquirer of the loans and remit the same to the latter after retaining its portion in terms of the individual agreements.

Loan Book

As at March 31, 2018, the loan book stood at Rs, 91,932.32 crore, as against Rs, 72,096.18 crore in the previous financial year.

SHARE CAPITAL (A) Authorized Share Capital

During the financial year under review, there has been no change in the authorized share capital of the Company. The Authorized share capital of the Company as at March 31, 2018 stands at Rs, 828,00,00,000 (Rupees Eight Hundred Twenty Eight crore only) divided into (i) 57,80,00,000 (Fifty Seven crore Eighty Lakh only) equity shares of Rs, 10 (Rupees Ten only) each aggregating to Rs, 578,00,00,000 (Rupees Five Hundred Seventy Eight crore only); and (ii) 25,00,000 (Twenty Five Lakh only) non-convertible redeemable cumulative preference shares of Rs, 1,000 (Rupees One Thousand only) each aggregating to Rs, 250,00,00,000 (Rupees Two Hundred Fifty crore only).

(B) Issued and Paid-up Share Capital

(1) Equity Share Capital

The Issued and paid up equity share capital of the Company as at March 31, 2018 was Rs, 313.66 crore divided into 31,36,58,847 equity shares of Rs, 10 each as compared to Rs, 313.15 crore divided into 31,31,52,205 equity shares of Rs, 10 each as at March 31, 2017. The increase was on account of allotment of 5,06,642 equity shares of Rs, 10 each, upon exercise of options (employee stock option plan and employee stock appreciation rights) by the eligible employees of the Company pursuant to the Employee Stock Option Scheme, 2009 (Plan III) and Employee Stock Appreciation Rights Plan 2015.

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

(2) Preference Share Capital

No preference shares have so far been issued by the Company

RESOURCE MOBILISATION

Your Company’s borrowing policy is under the control of the Board. The Company has vide special resolution passed by the Members of the Company, under Section 180(1)(c) of the Companies Act, 2013, at the 33rd Annual General Meeting held on July 21, 2017, authorized the Board of Directors to borrow money upon such terms and conditions as the Board may think fit in excess of the aggregate of paid up share capital and free reserves of the Company upto an amount of ' 2,00,000 crore and the total amount so borrowed shall remain within the limits as prescribed by National Housing Bank. Your Company has maintained a well diversified borrowing mix comprising of borrowings from the Banks (43%), debt market instruments (40%), deposits (11%), refinance from National Housing Bank (3%) and External Commercial Borrowings (3%).

Your Company continued to raise resources at competitive rates from its lenders while ensuring proper asset liability match.

Your Company’s total borrowings amounted to Rs,92,715.45 crore as at March 31, 2018, as against Rs, 81,341.24 crore in the previous year. The Company’s Asset-Liability Management

Committee (ALCO), set-up in line with the guidelines issued by NHB, monitors asset-liability mismatches to ensure that there are no imbalances or excessive concentrations on either side of the Balance Sheet. The ALCO lays down policies and quantitative limits that involve assessment of various types of risks and shifts in assets and liabilities to manage such risks and ensures that the liquidity and interest-rate risks are contained within the limits laid down by the Board. Your Company continued to raise longer tenor borrowings in the financial year 2017-18, as well. Another strategy adopted to keep a balanced asset liability management was to enter into strategic partnership with banks that are keen on good quality assets and assign long tenor receivables to them at mutually beneficial terms.

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

During the financial year under review, your Company continued to issue Non-Convertible Debentures on private placement basis pursuant to the special resolution passed by the Members of the Company and Policy for private placement of Non-Convertible Debentures (NCDs) of the Company formulated as per the Directions issued by National Housing Bank. The proceeds of the aforesaid issues were utilized for making disbursement to meet the housing finance requirements of the borrowers, repayment/prepayment of principal and interest of existing borrowers as well as for general corporate purposes.

Non-Convertible Secured Redeemable Debentures

During the financial year under review, your Company issued Non-Convertible Secured Redeemable Debentures on private placement basis amounting to ' 1,309.00 crore to banks and financial institutions. The outstanding balance of these Debentures including accrued premium on zero coupon NCDs as on March 31, 2018 amounts to Rs, 28,819.76 crore.

Non-Convertible Perpetual Unsecured Debentures

During the financial year under review, your Company has raised Rs, 500 crore through issuance of Non-Convertible Perpetual Unsecured Debentures. The outstanding balance of such debentures as at March 31, 2018 amounts to Rs, 1,160.70 crore.

Non-Convertible Subordinated Unsecured Debentures

As at March 31, 2018, your Company’s outstanding subordinated debts were Rs, 1,331.80 crore. The debt is subordinated to present and future senior indebtedness of your Company. Further, in the month of April, 2018, the Company has issued on private placement basis Non-Convertible Subordinated Unsecured Debentures amounting to Rs, 1,000 crore.

Debenture Trustee Agreement(s) were executed in favour of Catalyst Trusteeship Limited (formerly known as GDA Trusteeship Limited) for NCDs issued during the year.

During the financial year under review, the interest on NonConvertible Debentures issued by way of public issue and on private placement basis were paid by the Company on their respective due dates and there were no instances of any interest amount which were not claimed by the investors or paid by the Company after the date on which the same became due for payment.

Your Company being Housing Finance Company is exempted from the requirement of creating Debenture Redemption Reserve (DRR) in case of privately placed debentures. Therefore no DRR has been created for the Debentures issued by the Company on private placement basis. However as per the relevant provisions of Companies Act, 2013 and Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, your Company has created a Debenture Redemption Reserve (DRR) for Secured Redeemable Non- Convertible Debentures issued by way of Public issue. As at March 31, 2018, DRR stands at Rs, 1,170 crore.

Non-Convertible Debentures [NCDs] by way of public issue

The Board of Directors of your Company at their meeting held on April 30, 2018 have approved the raising of funds by way of public issue of Secured Redeemable Non-Convertible Debentures of face value of ' 1,000 each, subject to the receipt of necessary approvals, for an amount upto ' 15,000 crore (Rupees Fifteen Thousand crore only) (including the green shoe option), in one or more tranches, in terms of the provisions of the Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008, the Companies Act, 2013 and other applicable laws. The NCD Public Issue Committee as authorized by the Board of Directors approved the Draft Shelf Prospectus for the same. Thereafter, the Shelf Prospectus and Tranche 1 Prospectus for an amount of Rs, 3,000 crore (Base Issue Size) with an option to retain over-subscription up to Rs, 9,000 crore aggregating up to Rs, 12,000 crore were also approved by the said Committee. The required approvals were duly received from BSE Limited, National Stock Exchange of India Limited and Registrar of Companies, Mumbai, Maharashtra.

Medium Term Notes (MTN) programme (Masala Bonds)

During the financial year under review, your Company has set up Medium Term Note (MTN) programme for raising of funds by way of issue of secured Rupee denominated Notes overseas to be settled in USD for an amount not exceeding USD 2 billion. Under the said MTN Programme, the Company has on April 18, 2018 successfully raised an amount of Rs, 989.72 crore by issue of INR denominated USD settled 10,000,000,000 Notes having a tenure of 5 years. These bonds were listed on London Stock Exchange (LSE - International Securities Market (ISM) Segment).

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

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

Loans from Banks

Your Company continued to leverage on its long-term relationship with banks and thus tied up fund based working capital limit to Rs, 3,215 crore as at the end of financial year. Your Company also raised additional term loans from banks to the extent of Rs, 10,750 crore during the financial year 2017-18 at competitive rates available in the market and continued its focus on domestic sources.

Deposits

Fixed deposits are an important source of borrowing for your Company, and the Company has taken several initiatives to grow the retail deposit book in the year under review. Your Company has a wide distribution network through which these deposits are made available to public, and the Company has been constantly trying to expand this distribution network by reaching out to newer cities and newer markets continuously. As a result, the fixed deposit portfolio of your Company has seen a robust growth during the financial year under review. The total deposits grew by 51% to Rs, 10,243.11 crore as on March 31, 2018.

As of March 31, 2018, there were 12,580 depositors who had not claimed their deposits (along with interest due thereon) aggregating to Rs, 103.41 crore. Your Company sends appropriate reminders to the depositors before the date of deposit maturity to, and that is also followed up by reminders after the date of maturity in case the deposit remains unclaimed, to renew or claim their maturity amount of deposits by submitting the necessary deposit receipt along with the necessary instructions.

Your Company being a deposit accepting Housing Finance Company, registered with National Housing Bank (NHB), is governed by the provisions of the Housing Finance Companies (NHB) Directions, 2010, as amended and other directions, regulations and circulars issued by NHB. The Fixed Deposits accepted by the Company are secured appropriately by the floating charge on the statutory liquid assets maintained in terms of Sub-Sections (1) and (2) of Section 29B of the National Housing Bank Act, 1987.

Refinance from National Housing Bank (NHB)

During the financial year under review, an amount of Rs, 2,500 crore has been sanctioned to the Company under the NHB’s refinancing schemes for HFCs. Documentation and formalities for availing the same are being completed.

Commercial Papers

As at March 31, 2018, Commercial Papers outstanding amount stood at ' 6,050 crore.

External Commercial Borrowings (ECBs)

During the financial year under review, your Company has refinanced External Commercial Borrowings (ECBs) amounting to Rs, 784.25 crore in the form of a syndicated loan facility. The ECB was raised under the RBI Refinance Guidelines for Low Cost Affordable Housing Scheme of the Reserve Bank of India (RBI) under the approval route.

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

SECURITY COVERAGE FORTHE BORROWINGS

The security details of the aforesaid secured borrowings made by the Company are mentioned at Note No. 5 in the Notes to accounts forming part of the audited (standalone) financial statements for the financial year ended March 31, 2018.

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

CAREA1

-

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

-

-

Innovative Perpetual Debt Instruments (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

Your Company being a housing finance company, the disclosure regarding particulars of loans made, guarantees given and securities provided in the ordinary course of its business is exempted as per the provisions of Section 186(11) of the Companies Act, 2013.

Details of the investments made by the Company pursuant to the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to accounts forming part of the audited (standalone) financial statements for the financial year ended March 31, 2018.

CAPITAL ADEQUACY

As required under Housing Finance Companies (NHB) Directions, 2010, [NHB Directions, 2010] your Company is presently required to maintain a minimum capital adequacy of 12% on a standalone basis. The following table sets out the Company’s Capital Adequacy Ratios as at March 31, 2016, 2017 and 2018:

Particulars

| As on March, 31

2018

| 2017 2016

Capital Adequacy Ratio

15.29% 19.12% 16.74%

The Capital Adequacy Ratio (CAR) of your Company was at 15.29% as on March 31, 2018, as compared to the regulatory requirement of 12%.

In addition, the NHB Directions, 2010 also requires that your Company transfers minimum 20% 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 Nonperforming Assets (NPAs), under the Housing Finance Companies (NHB) Directions, 2010 [NHB Directions, 2010], as amended from time to time. The Company did not recognize income on such NPAs and further created provisions for contingencies on standard as well as non-performing housing loans and property loans, in accordance with the NHB Directions, 2010. The Company has also made additional provisions to meet unforeseen contingencies. The following table set forth Company’s gross NPAs, net NPAs, cumulative provisions and write-offs for the periods indicated:

(Rs, in crore)

Particulars

As of March 31

2018

2017

2016

Gross Non-Performing Assets

880.94

678.45

573.07

% of Gross NPA to Total Loan Portfolio

0.96%

0.94%

0.93%

Net Non-Performing Assets

514.65

419.43

361.02

% of Net NPA to Total Loan Portfolio

0.56%

0.58%

0.58%

Total cumulative provision- loans and other assets

974.08

714.19

583.02

Write-off

159.91

87.49

21.46

Recovery & Collections

The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) has been effectively utilised by your Company to initiate recovery action under the provisions of this Act, against the defaulting borrowers. Your Company has taken physical possession of the secured assets of some of the defaulters and the same are being auctioned as per the process laid down under the SARFAESI Act and the rules framed thereunder. Your Company today has a very robust and comprehensive collections setup comprising of call centers, field agents, law firms and auctioneers to deal with various stages of default while adhering to NHB guidelines.

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

INVESTMENTS

The Investment Committee constituted by the Board of Directors is responsible for approving investments in line with the policy and limits as set out by the Board. The investment policy is reviewed and revised in line with the market conditions and business requirements from time to time. The decisions to buy and sell up to the approved limit delegated by the Board are taken by the Chairman & Managing Director, who is assisted by Senior Executives of the Company. The investment function is carried out primarily to support the core business of housing finance to ensure adequate levels of liquidity and to maintain investment in approved securities in respect of public deposits raised as per the norms of National Housing Bank. Considering the time lag between raising of resources and its deployment, the surplus funds are generally being parked with liquid fund schemes of mutual funds, bonds and short term deposits with banks.

During the financial year under review, your Company earned Rs,547.08 crore by way of income from mutual funds & other treasury operations and Rs,413.25 crore by way of interest on bonds (including SLR bonds) and deposits placed with banks.

As per National Housing Bank guidelines, Housing Finance Companies are required to maintain Statutory Liquid Ratio (SLR) in respect of public deposits raised. Currently the SLR requirement is 12.50% of the public deposits. As at March 31, 2018, your Company has invested Rs, 652.45 crore (book value - gross) in approved securities comprising of government securities, government guaranteed (State and Central) bonds, State Development Loans and by way of bank deposits and NHB Bonds for Rs, 650.29 crore. It is being maintained within the limits prescribed by National Housing Bank.

During the financial year under review, your Company made a strategic investment of Rs, 21.57 crore in Social Worth Technologies Private Limited, which is engaged in the business of developing and providing technology related to consumer lending through the platform of Early Salary, being a mobile app extending a short term small amount loan to salaried individuals. The investment by the Company was made in two tranches i.e. Rs, 0.01 crore by way of subscribing to 10 equity shares alongwith Rs, 13.40 crore by way of subscribing to 13,706 Non-Cumulative, Compulsorily & Fully Convertible Preference Shares (Series A) and Rs, 8.16 crore by subscribing to 6,235 Non-Cumulative, Compulsorily & Fully Convertible Preference Shares (Series B), respectively.

SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES

As on March 31, 2018, your Company has three (3) wholly owned subsidiaries, three (3) joint venture(s) and three (3) associate companies. The Board of Directors reviewed the affairs of all the subsidiaries, joint venture(s) and associate companies.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, your Company has prepared Consolidated Financial Statements of the Company which forms part of this Annual Report. Further, a Statement containing salient features of financial statements of the subsidiaries, joint venture entities and associate companies in the prescribed format AOC-1, pursuant to the provisions of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 forms part of this Board’s report as "Annexure - 2”. The Statement also provides details of performance and financial position of each of these companies.

In accordance with the provisions of Section 136 of the Companies Act, 2013 read with the applicable rules, the audited standalone financial statements, the consolidated financial statements and related information of the Company and the audited accounts of the subsidiary/ies, joint venture entities and associate companies, are available on the Company’s website i.e. www.dhfl.com. These documents shall also be available for inspection till the date of the ensuing Annual General Meeting during the business hours,

i.e. between 10.00 a.m. to 5.00 p.m. on all working days (except Saturday) at the Registered 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 owned subsidiary of the Company with the main object to, inter-alia, carry on the business of providing all kinds of advisory/ consultancy services and fee based intermediation activities.

DAIPL holds 32.88% stake in the equity share capital of the joint venture entity i.e. DHFL Pramerica Asset Managers Private Limited.

DAIPL earned an advisory fees of Rs, 0.05 crore during the financial year ended March 31, 2018 as against Rs, 0.05 crore for the financial year 2017.

DHFL Investments Limited (DIL)

DHFL Investments Limited was incorporated as a wholly owned subsidiary of the Company in the previous financial year with the main object to carry on the business of investment activities. The Company made an investment of Rs, 100.05 crore in DIL by way of subscription to 10,00,50,000 equity shares of Rs, 10 each in the previous financial year. During the financial year under review, your Company made further investment of Rs, 1.20 crore by subscribing to 12,00,000 equity shares of Rs, 10 each issued by DIL on preferential basis.

DIL holds 50% stake in the equity share capital of the joint venture entity DHFL Pramerica Life Insurance Company Limited. DIL had during the previous financial year, by way of issue of Compulsory Convertible Debentures (CCDs), raised an amount of Rs, 1,901 crore from Wadhawan Global Capital Limited (formerly Wadhawan Global Capital Private Limited). The said CCDs are convertible into equal number of equity shares of DIL after the expiry of 100 months from the date on which the CCDs were issued and mandatorily to be converted on the expiry of 110 months.

As at March 31, 2018, the net worth of DIL stood at ' 99.78 crore and its loss for the period ended March 31, 2018 was Rs, 1.47 crore.

DHFL Changing Lives Foundation

During the year under review, your Company has established a wholly owned subsidiary ‘DHFL Changing Lives Foundation’, a Non-Profit Company, limited by guarantee, registered under Section 8 of the Companies Act, 2013 on December 1, 2017 to take forward the Company’s CSR Vision and implement social programmes in a far more collaborative and participative way. DHFL Changing Lives Foundation has initiated implementing the Company’s flagship CSR programme i.e. Early Childhood Care and Education (ECCE). It further proposes to invest in various capacity building initiatives to develop the programme, scale it to new geographies, foster partnership and use the learnings for creating a holistic approach to ECCE and make it an adaptable model in the National agenda for sustainable development goals.

Highlights of Performance of Joint Ventures

DHFL Pramerica Life Insurance Company Limited

Your Company had acquired 50% equity stake in DHFL Pramerica Life Insurance Company Limited (erstwhile DLF Pramerica Life Insurance Company Limited) ("DPLI”) , a life insurance Company registered with Insurance Regulatory and Development Authority of India, from DLF Limited in December, 2013, and entered into a joint venture with Prudential International Insurance Holdings Limited ("Prudential”). In order to unlock the value of the Company’s investment in DPLI, with the approval of Board of

Directors, the Members of the Company and relevant regulatory authorities, during the financial year 2016-17, the entire equity stake held in DPLI representing 50% of the paid-up equity share capital of DPLI was sold to DIL, a wholly owned subsidiary.

As at March 31, 2018, the net worth of DPLI stood at Rs,958.93 crore and its Profit before tax grew by 73% at Rs, 121.53 crore for financial year 2018 as against Rs, 70.42 crore for financial year 2017. The Assets Under Management of DPLI stood at Rs, 3,701.80 crore as at March 31, 2018 as against Rs, 2,732.70 crore as at March 31, 2017. DPLI has presence in 29 states.

DHFL Pramerica Asset Managers Private Limited & DHFL Pramerica Trustees Private Limited

Upon entering into a joint venture with PGLH of Delaware, (a wholly-owned indirect subsidiary of Prudential Financial Inc.) your Company acquired 50% of the equity share capital of DHFL Pramerica Asset Managers Private Limited (formerly known as Pramerica Asset Managers Private Limited, hereinafter referred to as "DPAMPL”) the Asset Management Company of DHFL Pramerica Mutual Fund (formerly known as Pramerica Mutual Fund, hereinafter referred to as "DPMF”) and DHFL Pramerica Trustees Private Limited (formerly known as Pramerica Trustees Private Limited, hereinafter referred to as "DPTPL”), the Trustee of DPMF. Your Company is registered with Association of Mutual Funds in India (AMFI) vide registration No. ARN - 101515 as AMFI registered Mutual Fund Advisor and undertakes the distribution of mutual fund products of DPAMPL.

As at March 31, 2018, 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, 2018, the net worth of DPAMPL stood at Rs, 138.16 crore with a Profit before tax of Rs, 9.75 crore for financial year 2017-18 as against Rs, 7.65 crore for financial year 2017.The Assets under Management of DPAMPL stood at Rs, 23,595.92 crore as at March 31, 2018 as against Rs, 26,117 crore as at March 31, 2017. DPAMPL has presence in 11 states.

Highlights of Performance of Associate Companies

Aadhar Housing Finance Limited (formerly DHFL Vysya Housing Finance Limited) (Aadhar)

During the year under review, the erstwhile Aadhar Housing Finance Limited (the Transferor Company) amalgamated with DHFL Vysya Housing Finance Limited (the Transferee Company) vide the order dated October 27, 2017 passed by the National Company Law Tribunal (NCLT) and the name of the amalgamated entity was subsequently changed to Aadhar Housing Finance Limited.

Aadhar Housing Finance Limited (formerly known as DHFL Vysya Housing Finance Limited) is a housing finance company registered with NHB and it focuses to cater to the lower and middle income segment.

As per the scheme of amalgamation approved by NCLT, 10 shares of the Transferee Company were allotted for every 119 shares held by the shareholders of Transferor Company. Your Company was holding 10,48,989 equity shares in Transferee Company and 1,49,00,000 equity shares in Transferor Company.

Therefore, consequent to the amalgamation, 12,52,101, equity shares of Rs, 10 each of the Transferee Company were allotted to your Company for 1,49,00,000 equity shares held in transferor Company. As on March 31, 2018, your Company holds 23,01,090 equity shares i.e. 9.15% in the Aadhar Housing Finance Limited (formerly known as DHFL Vysya Housing Finance Limited).

As at March 31, 2018, the net worth of Aadhar Housing Finance Limited (formerly DHFL Vysya Housing Finance Limited) stood at Rs, 699.60 crore (including capital reserve on amalgamation) and its Profit before tax grew by 345% at Rs, 159.05 crore for financial year 2017-18 as against Rs, 35.76 crore for financial year 2016-17. The Assets Under Management of Aadhar stood at Rs, 7,966.41 crore as at March 31, 2018 as against Rs, 1,809.99 crore as at March 31, 2017. The financial figures as on March 31, 2018 are for the amalgamated entity, hence are not comparable. Aadhar has presence in 18 states.

Avanse Financial Services Limited (Avanse)

Avanse Financial Services Limited is a non-banking financial company registered with Reserve Bank of India. During the year under review, Avanse has embarked on its journey of getting transformed from an education focused NBFC to diversified NBFC and have launched new businesses viz., MSME loans and Commercial finance while keeping its core focus on education segment.

During the year under review, your Company invested further amount of Rs, 77.36 crore in Avanse by subscribing to 70,53,197 equity shares pursuant to the Rights Issue of shares by Avanse. As on March 31, 2018 the percentage of shareholding of your Company stood at 32.49% of the paid-up equity share capital of Avanse.

As at March 31, 2018, the net worth of Avanse stood at Rs, 485 crore and its Profit before Tax grew by 172% at Rs, 15.52 crore for financial year 2018 as against Rs, 5.72 crore for financial year 2017. The Assets under Management of Avanse stood at Rs, 2,187 crore as at March 31, 2018 as against Rs, 982.25 crore as at March 31, 2017. Avanse has presence in 15 states.

DHFL Ventures Trustee Company Private Limited (DHFL Ventures)

DHFL Ventures is a Company which acts as a trustee company of venture capital funds and alternative investment funds. During the previous financial year, your Company had transferred its entire equity stake held in DHFL Ventures to its wholly owned subsidiary i.e. DHFL Investments Limited at face value.

As at March 31, 2018 the net worth of DHFL Ventures stood at Rs, 0.07 crore and its Profit before tax was Rs, 0.02 crore for financial year 2017-18. The total assets of DHFL Ventures stood at Rs, 0.094 crore as at March 31, 2018 as against Rs, 0.08 crore as at March 31, 2017.

INFORMATION TECHNOLOGY

Your Company is expanding technology landscape through advanced technology solutions as part of digital transformation program which comprises of technology enablers for business growth and operational efficiency along with a lot of emphasis on IT security.

The journey towards digital transformation is to enhance customer and employee experience by strengthening enterprise architecture and expanding the digital footprint to meet evolving business needs.

As part of this program, best-fit solutions are being implemented/ enhanced in the areas of (i) customer relationship management to achieve higher customer satisfaction and enhanced marketing and sales effectiveness; (ii) digital channels to provide for effective interaction between the Company and its customers and business partners/agents; (iii) enhancing deposits system; (iv) complete digitization of processes and document management to facilitate the centralization of processes; (v) mobility solutions for collections management ,customer on boarding and technical verifications; (vi) loan origination and management system (vii) middleware enhancements; (viii) Integration with fintech solutions for improving operational efficiency.

Your Company is also exploring technology innovations and intelligent analytics to draw meaningful insights to stay ahead of the curve.

HUMAN RESOURCES

Your Company is a valued employer brand with a compelling employee value proposition. Your Company consistently focuses on building people practices that ensures learning, earning and sustainable growth, while balancing business needs and individual aspirations. Your Company’s Human Resource team is a strategic partner to the organization’s growth charter. It has adopted cutting edge technology to facilitate collaboration and communication till the last mile.

Your Company significantly invests in professional development for its employees at all levels of the pyramid. A robust career developmental framework and a blend of classrooms with online and on the job training, aligned to the Company’s business objectives provides the employees with opportunities to excel in their work and be well equipped for future roles.

You Company also has defined succession pathways for the employees for them to grow internally in the organization. Your Company proactively identifies high potential employees and ensures a ready talent pool to take up next level leadership roles.

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

Your Company has put in place an open, transparent and meritocratic culture that helps talent to perform, grow and stay in the Company. Your Company has instituted a performance management process that operates bi-annually and appraises its staff not only on past performance but also on their future potential. Your Company works on the belief that every great workplace is marked by synergistic and gender diverse teams and thereby promotes diverse workforce to benefit with improved business performance, better corporate governance and stronger brand image.

Your Company conducts regular internal surveys to understand the pulse of the organization basis which action areas are pinned down. Through this your Company promotes a culture of feedback and strives to achieve continued higher levels of employee satisfaction.

In an ongoing effort to being one of the most preferred employers in the financial services space, your Company will continue to significantly invest in employee engagement, talent & leadership development and best in class process and policies. The overriding objective is to foster a culture of excellence that is purpose driven, propelled by the discretionary efforts of its employees.

Learning and Development

Your Company’s Learning & Development Team (L&D Team) is responsible for providing learning solutions to every role within the Company by designing comprehensive training framework to match the dynamic and ever evolving business trends.

Your Company has created stronger depth and focus in its skill building efforts. It has been able to support professional development and empower employees to deliver improved quality of service through its training intervention and motivating them to perform with renewed vigor and enthusiasm. Teaching expertise has been nurtured in-house, in the form of dedicated trainers, facilitators, content developers as well as subject matter experts from business teams.

During the financial year under review, training was imparted to 4584 on roll employees and 2626 off roll employees, covering a wide range of functional areas including sales skill development programs, credit analytical skills, appraisal techniques, fraud & risk management. "Organization Orientation” the exclusive monthly induction program for the new recruits is conducted to give an overall view of the Company’s vision and mission. Similarly programs based on soft skills and monitoring techniques were also conducted and 4113 employees were covered, of which 3337 were on roll and 776 were off roll.

In keeping with its importance and in compliance with National Housing Bank norms, trainings on Know Your Customer (KYC) & Anti Money Laundering (AML) with a total coverage of 2801 employees were also imparted at all levels within the organization. External training programs and cross functional exposures were utilized to provide an extra edge to employees for continuous and better performance through learning and job experience. To leverage the internal strength of L&D Team, only 14.24% of trainings were fully outsourced.

Your Company has partnered with the best in class leadership trainers of the country for corporate breakthrough workshop for key position holders and business managers. To study the impact of training, your Company engages leading trainers from the industry to benchmark Company’s skills and for analyzing the same with focus on measuring and improving employee engagement and learning quotient.

Taking concrete steps based on the study findings, is helping the organization in building a stronger and more engaged workforce. Customer focus remains at the core of all L&D initiatives.

Your Company’s Human Resources initiatives and L&D systems are designed to ensure an active employee engagement process, leading to better organizational capability and vitality 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’s remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016, forms part of this Board’s report as "Annexure-3”.

(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 (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended by the Companies (Appointment and Remuneration of Managerial Personnel) Amendment Rules, 2016 forms part of this Board’s report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Report and Financial Statements are being sent to the Members of the Company excluding the said statement. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office of the Company.

EMPLOYEES STOCK OPTIONS (ESOP)/ EMPLOYEE STOCK APPRECIATION RIGHTS (ESARS)

Your Company has formulated employee stock option schemes/ employee stock appreciation rights plan with an intent to reward the employees of the Company for their performance and to motivate them to contribute to the growth and profitability of the Company. The Company 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 the Board of Directors and pursuant to the special resolution passed by the Members of the Company at the Annual General Meeting held on July 23, 2007, formulated three employee stock option schemes, ESOP - 2008, ESOP -2009 - Plan II and ESOP - 2009 - Plan III. The said stock option schemes are in compliance with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (SEBI SBEB Regulations). The ESOP 2009 Plan II lapsed on November 25, 2015 and the ESOP 2009 Plan III was completed on June 30, 2017 upon allotment of the balance 2,00,000 equity shares of ' 10 each under the said plan.

Pursuant to the resolution passed by the Board of Directors of the Company, at its meeting held on January 16, 2015 and the special resolution passed by the Members of the Company on February 23, 2015 through Postal Ballot, the DHFL Employee Stock Appreciation Rights Plan 2015 ("DHFL ESAR Plan 2015”/"the Plan”) was approved in accordance with the provisions of SEBI (SBEB) Regulations, exercisable into not more than 51,46,023 fully paid-up equity shares in aggregate, having face value of ' 10 each. Consequent to the bonus shares issued by the Company to its Members in the ratio 1:1 during the financial year 2015-16, the total number of employee Stock Appreciation Rights (ESARs) also increased in the same ratio i.e. exercisable into not more than 1,02,92,046 fully paid up equity shares.

During the financial year under review, Nomination and Remuneration Committee on July 13, 2017 approved Grant III of 32,47,100 and Grant IV of 5,50,000 ESARs and thereafter, on October 16, 2017 and January 22, 2018 approved Grant V & VI of 1,50,800 ESARs and 71,900 ESARs respectively, to the eligible employees of the Company conferring upon them a right to receive equity shares equivalent to the appreciation in the value of the shares of the Company. Nomination and Remuneration Committee on January 22, 2018 also approved the amendment to the vesting schedule in respect of the ESARs granted under Grants III, IV and V.

During the financial year under review, the Company allotted to the eligible employees from time to time 3,06,642 equity shares of ' 10 each on exercise of 5,25,394 ESARs, under Grant I and II of DHFL ESAR Plan 2015.

During the financial year under review, the Members of the Company, approved amendment to the DHFL ESAR Plan 2015, inter-alia, for increasing the number of equity shares that can be allotted there under to 2,67,82,046 equity shares from the earlier limit of 1,02,92,046 equity shares. Pursuant to the subject approval, the Nomination and Remuneration Committee on March 22, 2018 approved Grant VII of 1,17,35,600 ESARs to the eligible employees of the Company.

The Company’s Nomination and Remuneration Committee of the Board of Directors, inter-alia, administers and monitors the Employee Stock Option Schemes/Employee Stock Appreciation Rights Plans of the Company, in accordance with SEBI SBEB Regulations.

The Company has received a certificate from its auditors confirming that the Employee Stock Options Schemes/Employee Stock Appreciation Rights Plan have been implemented in accordance with SEBI SBEB Regulations 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 the inspection by the Members of the Company. The applicable disclosures as stipulated under SEBI SBEB Regulations, for the financial year 2017-18, forms part of this Board’s report as "Annexure-4” and in terms of Regulation 14 of SEBI SBEB Regulations the said details 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 RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014 A. Conservation of Energy

Your Company is not engaged in any manufacturing activity and thus its operations are not energy intensive. However, adequate measures are always taken to ensure optimum utilization and maximum possible saving of energy. During the financial year under review, your Company has made capital investment of approximately Rs, 8 crore at various locations, towards the installation of energy conservation equipment’s such as replacement of CFL (Compact Fluorescent Lamp) with LED (Light- Emitting Diode) lights, energy saving Air-conditioners (VRV), replacement of normal tube lights with LED lights at the National Office of the Company and other pan India branches. These initiatives have resulted in power saving on a daily basis. The Company on its lending side actively associates in all programmes and schemes of the Government and National Housing Bank (NHB), in promoting energy efficient homes.

B. Technology Absorption

Your Company has taken positive steps towards digital transformation to enhance customer experience, provide superior customer service, improve operational efficiency to support evolving business needs.

By expanding digital footprint, your Company has embraced mobility solutions in a big way to improve productivity and efficiency in customer on boarding, collections and technical verification processes. In addition, your Company is doing continuous enhancement of the core technology architecture to provide a scalable future ready platform to support and enable the company’s growth. The new technology platform covers all functions starting from sales to loan underwriting and management, customer relationship management, financial accounting and collections management.

Your Company is also adopting analytics solutions in a big way to provide better insights about its customers and internal operations, and take informed decisions based on advanced and predictive analytics. The various technology advancements that has been undertaken is aimed at serving the customers better, managing the processes efficiently and economically without compromising on security and controls.

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. 34 in the Notes forming part of the audited (standalone) financial statements for the financial year ended March 31, 2018.

INSURANCE

Your Company has insured its various properties and facilities against the risk of fire, theft, risk of financial loss due to fraud and

other perils, etc. and has also obtained Directors’ and Officers’ Liability Insurance Policy which covers the Company’s Directors and Officers (employees in managerial or supervisory position) against the risk of financial loss including the expenses pertaining to defense cost and legal representation expenses arising in the normal course of business. Also the Public Liability policy availed covers the legal liability arising out of third party bodily injury or third party property damage in Company premises.

Further, your Company has obtained money policy to cover "money in safe and till counter and money in transit” for the Company’s branches and various offices. All the vehicles owned by the Company are also duly insured.

Your Company also has in place a group mediclaim policy for its employees and their dependent family members, group term life and group personal accident policies, which provide uniform benefits to all the employees.

During the previous financial year, your Company registered with Insurance and Regulatory Development Authority of India (IRDAI) to act as a Corporate Agent (Composite) for distribution and solicitation of life and general insurance products of DHFL Pramerica Life Insurance Company Limited and Cholamandalam MS General Insurance Company Limited.

During the financial year 2017-18, your Company entered into a Corporate Agency Agreement with DHFL General Insurance Limited where the Company serves as group administrators for group health and/or personnel accident insurance policy for its customers and also solicit Property (Fire & Standard Perils) retail general insurance product to ensure adequate insurance coverage for the properties financed during the tenure of the loan.

Your Company also educates its customers in relation to the insurance products suitable for them.

Your Company also has in place a policy on Open Architecture for Retail Insurance Business, in terms of the Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015, which lays down the manner of soliciting and servicing insurance products and addresses the manner of adopting the philosophy of open architecture and its implementation.

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 with the various Circulars, Notifications and Guidelines issued by NHB from time to time. The Circulars, Notifications and Guidelines issued by NHB are also placed before the Audit Committee/Board of Directors at regular intervals to update the Committee/Board members on the status of compliance with the same.

VIGIL MECHANISM (WHISTLE BLOWER POLICY)

Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act, 2013 read with Rule 7 of Companies (Meetings of Board and its Powers) Rules, 2014 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has in place a Whistle Blower Policy, which provides for a vigil mechanism that encourages and supports its Directors and employees to report instances of illegal activities, unethical behavior, actual or suspected, fraud or violation of the Company’s Code of Conduct and Code of Business Ethics. It also provides for adequate safeguards against victimization of persons who use this mechanism and direct access to the Chairman of the Audit Committee in exceptional cases. During the year under review, the said policy was amended with a view to ensure better implementation of the policy.

The said policy is available on the website of the Company at the URL: https://www.dhfl.com/docs/default-source/investors/whistle-blower-policy/whistle-blower-policy-revised.pdf

PREVENTION, PROHIBITION & REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

As per the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and has a robust mechanism to redress the complaints reported there under. An Internal Committee has been constituted, which comprises of internal members and an external member who has experience in the subject field.

Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received there under and the details relating thereto are as follows:

(a) Number of complaints received in the year: Nil

(b) Number of complaints disposed of during the year: Nil

(c) Number of cases pending more than ninety days: Nil

(d) Number of workshops or awareness programme against sexual harassment carried out: Your Company on a regular basis sensitizes its employees on prevention of sexual harassment through various workshops, awareness programmes which are conducted at branch, regional, zonal and national level.

(e) Nature of action taken by the employer or district officer: Nil

RISK MANAGEMENT

Your Company is committed to manage its risk in a proactive manner and has adopted a structured and disciplined approach to risk management by developing and implementing risk management framework. With a view to manage its risk effectively your Company has in place a Comprehensive Risk Management Policy which covers a formalized Risk Management Structure, alongwith other aspects of Risk Management i.e. Credit Risk Management, Operational Risk Management, Market Risk Management and Enterprise Risk Management. The Risk

Management Committee of the Board, on periodic basis, oversees the risk management systems, processes and minimization procedures of the Company

During the financial year under review, the risk management policy of the Company was amended in accordance with the notification issued by National Housing Bank.

NOMINATION (INCLUDING BOARDS’ DIVERSITY) REMUNERATION & EVALUATION POLICY (NRE POLICY) & PERFORMANCE EVALUATION

Your Company recognizes the importance and benefits of having a diverse Board. It endeavors to ensure diversity on the Board through varied skills, experience and background, gender, knowledge and other distinguishing qualities to enhance the overall effectiveness of the Board which in turn brings in valuable contribution to the Company’s business strategies, plans and future growth aspects.

Your Company also believes that the Board shall at all times represent an optimum combination of Executive and Non Executive Directors as well as Independent Directors. The Nomination (including Boards’ Diversity), Remuneration & Evaluation Policy (NRE Policy) of the Company, inter-alia, lays down the approach to diversity of the Board, criteria for identifying the persons who are qualified to be appointed as Directors and/ or Senior Management Personnel of the Company, along with the criteria for determination of remuneration of Directors, KMPs and other employees and their evaluation and includes other matters, as prescribed under the provisions of Section 178 of Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

The said policy is available on the website of the Company at the URL: https://www.dhfl.com/docs/default-source/investors/ nomination-(including-boards-diversity)-remuneration-and-evaluation-policy-of-the-company/nomination-remuneration-evaluation-policy-revised.pdf

The Nomination and Remuneration Committee of the Board of Directors has laid down the performance evaluation and assessment criteria/parameters for the Board (including Board Committees) and individual Directors. The Independent Directors in terms of Schedule IV of the Companies Act, 2013 at its separate meeting evaluated the performance of the Chairman & Managing Director, Joint Managing Director & CEO, Non-Executive Director and the Board as a whole.

The Nomination and Remuneration Committee carried out the evaluation of every Director’s performance and the Board additionally carried out a formal evaluation of its own performance, Board Committees namely Audit Committee, Nomination and Remuneration Committee, Risk Management

Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Finance Committee and all the individual Directors without the presence of the Director being evaluated. The detailed process and manner of performance evaluation carried out basis the criteria/parameters laid down for the purpose has been explained in the Report on Corporate Governance, forming part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY

Your Company has in place Corporate Social Responsibility policy (CSR Policy), as per the provisions of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules,

2014, as amended, which, inter-alia, lays down the guidelines and mechanism for undertaking socially useful projects for welfare and sustainable development of the community at large. As per the provisions of Section 135 of the Companies Act, 2013, your Company has constituted a Corporate Social Responsibility Committee. During the year under review, the CSR Committee was reconstituted and Mr. Harshil Mehta, Joint Managing Director & Chief Executive Officer was appointed as a member of the said Committee.

The Corporate Social Responsibility Committee assists the Board in fulfilling its duty towards the community and society at large by identifying the activities and programmes that can be undertaken by the Company, in terms of the CSR Policy of the Company. The composition of the CSR Committee and its terms of reference are given in the Report on Corporate Governance forming part of this Annual Report. During the year under review, your Company has established a wholly owned subsidiary ‘DHFL Changing Lives Foundation’, for implementing the Company’s CSR programmes. The Annual Report on CSR activities forms part of this Board’s report as "Annexure - 5”.

LISTING OF SHARES OF THE COMPANY

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

The Company has paid the listing fees as payable to the BSE Limited and the National Stock Exchange of India Limited for the financial year 2018-19 on time.

MARKETING AND BRANDING

Your Company through its focused branding and marketing effort has been continuously working towards fulfilling its Founder Chairman’s vision of enabling home ownership to every Indian. Your Company has also strengthened its reach and services, especially among the Lower and Middle Income (LMI) customer segment. Your Company believes in handholding the consumer in his journey of owning a home of his own.

Therefore, your Company in its communication has been portraying itself as a flexible partner in making customers dream come true. Thus, the tagline ‘Ghar Jaisa Loan’ was also created, which infers loan according to customer’s needs.

In its communication journey your Company roped in Shah Rukh Khan as its brand ambassador, who has played the role of an elder brother/advisor to the customers. Your Company started advertising in 2015 with its brand ambassador, and in its various advertisements in these 3 years your Company touched upon various facets of buying a home & tried to build an emotional connect with its customers. In its latest communication, your Company has emphasized on its Founder Chairman’s vision of giving India a home, by dreaming for a country where everyone owns a home (Aisa Desh Ho Mera).

Your Company has also ensured value driven communication, to reinforce the significance of 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 loans and welfare schemes, including the Pradhan Mantri Awas Yojana (PMAY), using digital characters ‘Sharmaji & Vinodji’ launched in 2016 as a part of its consumer education initiative. In addition to this your Company also launched a country wide unique initiative called ‘Griha Utsav - Property Expo and Home Loan Mela’ wherein a market place was created for builders to display affordable properties and consumers who were looking for such properties were invited to visit the expo. Throughout the year your Company conducted 31 such exhibitions and touched millions of lives by enabling home ownership.

AWARDS AND RECOGNITIONS

Your Company has added yet another feather in its cap and kept up its record of displaying commendable performance in the housing finance service sector which is reflected by the awards won by the Company during the Financial Year 2017-18, as recognition at various award forums:

- DHFL awarded the marketing campaign of the year at the ET NOW BFSI Awards.

- DHFL won the 12th Indy’s award for the most creative Ad on TV in the BFSI sector.

- DHFL awarded the Best Housing Finance Company of the year at the ET NOW BFSI award.

- Mr. Kapil Wadhawan, Chairman & Managing Director awarded as the Best CEO in Financial Service by Business Today.

- DHFL awarded as Leading Housing Finance Company in the National Awards for Best Housing Finance Companies organized by CMO Asia and World Federation of Marketing.

- DHFL awarded the marketing campaign of the year for the campaign ‘Aisa Desh Ho Mera’ at the Global Marketing Excellence presented by CMO Asia.

- DHFL awarded as Most Trusted Housing Finance Brand in the National Awards for Best Housing Finance Companies organized by CMO Asia and World Federation of Marketing.

- DHFL awarded "The Best Performing Primary Lending Institution under CLSS for MIG” by My Liveable City and knowledge partner National Housing Bank.

- The DHFL Griha Utsav initiative wins Gold at Asian Customer Engagement Forum for best use of BTL activities to drive financial inclusion.

- DHFL Home Loan Dilse campaign wins the Grand Prix Award for the marketing campaign of the year at the Asian Customer Engagement Forum.

- DHFL awarded as One of India’s Dream Companies to Work in the Housing Finance Sector by the World HRD Congress.

- DHFL awarded the marketing campaign of the year for the campaign ‘Home Loan Dilse’ at the National Awards for Marketing Excellence presented by Times Network.

- DHFL won the Gold award for the CSR Campaign Delivering Hope at the Asia Pacific Customer Engagement Forum.

- DHFL won the Gold at the ACEF awards for the best use of Celebrity Endorsement for Home Loan Dil Se campaign.

- DHFL won the Golden Globe Tigers Award 2017 for the Most Admired Service Provider in the Financial Sector held in Kuala Lumpur, Malaysia.

DISTRIBUTION NETWORK

The distribution network of your Company is designed to reach out to the Lower and Middle Income (LMI) segment and tap a growing potential customer base throughout India. Your Company maintains a pan-India marketing and distribution network with a presence across 347 offices throughout India which includes 187 Branches, 135 Service Centers, 20 Zonal/Regional/CPU offices, 2 Disbursement hubs, 1 Collection center, 1 Corporate office and 1 National office as at March 31, 2018. Additionally, your Company has international representative offices located in London and Dubai.

Your Company’s network is grouped into Zones and Regions located pan-India with significant presence in Tier II and Tier III cities, town and its peripheral suburbs. Your Company believes that its business model allows it to deliver improved turnaround time and to improve customer satisfaction while maintaining asset quality. The distribution network includes direct selling teams (i.e. staff working with us on a contract basis), Direct Selling Agents [DSAs] and other business referral partners. Direct selling teams work under supervision of the employees of your Company and the payment for their services is a combination of fixed fee and variable commission based on the disbursement of loans sourced by them. The majority of the loans are sourced through the direct selling teams. Your Company has also entered into tie-ups with a number of Indian public and private sector banks to provide their customers access to the home loan solutions offered by your Company. The tie-ups with such banks allows your Company an access to the ally banks’ customers and branch networks while providing them with the option to participate in the loan syndication programs with the Company.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors at its Meeting held on August 30, 2017 on the recommendations of the Nomination and Remuneration

Committee and subject to the approval of the Members of the Company, appointed Mr. Harshil Mehta (DIN: 03038428) as the Whole Time Director (designated as Joint Managing Director & Chief Executive Officer) with effect from September 1, 2017, for a period of five years and that his office shall be liable to retire by rotation. The Members of the Company by way of postal ballot on November 27, 2017, approved the said appointment.

Dr. Rajiv Kumar (DIN:02385076) an Independent Director on the Board of the Company since August 7, 2015, expressed his desire to resign from the position of an Independent Director due to his appointment as the Vice Chairman of NITI Aayog, a National Institution for Transforming India. The Board of Directors accepted his resignation with effect from September 11, 2017. The Board of Directors places on record their appreciation for the invaluable contribution and services rendered by Dr. Rajiv Kumar during his tenure as a Director with the Company.

Pursuant to the approval of the Members of the Company by way of postal ballot on November 27, 2017, terms of appointment and remuneration of Mr. Kapil Wadhawan (DIN: 00028528) - Chairman and Managing Director of the Company, were revised with effect from November 1, 2017 including that his office shall not be liable to retire by rotation, for the remaining term.

In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association, Mr. Dheeraj Wadhawan (DIN: 00096026), Non-Executive Director being the longest in office among directors who are liable to retire by rotation, retires by rotation and being eligible; offers himself for re-appointment at the ensuing Annual General Meeting.

All Independent Directors have given declarations that they meet the criteria of independence, as laid down under Section 149(6) of the Companies Act, 2013 and the provisions of Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

None of the Directors of your Company are related to each other, except for Mr. Dheeraj Wadhawan, Non-Executive Director who is the brother of Mr. Kapil Wadhawan, Chairman & Managing Director of the Company.

Brief resume of the Director, proposed to be re-appointed, nature of his expertise in specific functional areas and names of other companies 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 Disclosure Requirements) Regulations, 2015 and Secretarial Standard (SS-2) on General Meetings are provided in the annexure to the Notice of the Thirty Fourth (34th) Annual General Meeting being sent to the Members along with the Annual Report.

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

During the year under review, no stock options were issued to the Promoter Directors or Independent Directors of the Company except that 11,67,200 ESARs were granted to Mr. Harshil Mehta, Joint Managing Director and Chief Executive Officer.

BOARD MEETINGS

Your Company holds at least four Board meetings in a year one in each quarter, inter-alia, to review the financial results of the Company and an annual calendar of meetings of the Board are finalized well before the beginning of the financial year after seeking concurrence of all the Directors. All the decisions and urgent matters approved by way of circular resolutions are placed and numbered and noted at the subsequent Board meeting. In case of urgent matters, additional Board meetings are held in between the quarterly meetings.

During the financial year 2017-18, six (6) Board Meetings were convened and held. The intervening gap between the Board Meetings was within the period prescribed under the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015. The details of the Board composition, its meetings held during the year along with the attendance of the respective Directors thereat 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 Section 177 of the Companies Act, 2013 and provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Board of Directors have constituted other committees namely

- Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Risk Management Committee, Finance 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 the discharge of its responsibilities. During the year under review, pursuant to a circular issued by National Housing Bank, the Board constituted a special committee i.e. "Review Committee” for identification of the willful defaulters as per the NHB circular/ notification. The Board of Directors of your Company at their meeting held on April 30, 2018 have constituted another special committee i.e. "NCD Public Issue Committee” to take all decisions in connection with the issue of Non-convertible Debentures by way of public issue, in one or more tranches and allotment there under.

The details of the composition of the Audit Committee along with that of other Board committees and other details including their respective terms of reference are included in the Report on Corporate Governance forming part of this Annual Report.

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

PARTICULARS OF CONTRACTS AND AGREEMENTS WITH RELATED PARTIES

Your Company has in place Related Party Transaction Policy as per the provisions of Companies Act, 2013 read with the rules made there under and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which describes the related party transactions requiring requisite approvals and requirements of appropriate reporting and disclosure of transactions between the Company and its related parties. The said policy also defines the materiality of related party transactions and lays down the procedures of dealing with such transactions.

The Company obtains prior approval of the Audit Committee before entering into any related party transaction. Approval of the Board of Directors in terms of Section 188 of the Companies Act, 2013 is also obtained for entering into Related Party Transactions by the Company, wherever applicable. A quarterly update on the related party transactions is provided to the Audit Committee and the Board of Directors for their review and consideration.

All related party transactions entered during the financial year were largely in ordinary course of business and on an arm’s length basis.

There was no material related party transaction entered by the Company with any related party during the financial year under review. Thus, the disclosure of related party transaction as per Section 134(3)(b) of the Companies Act, 2013 in the prescribed Form AOC - 2 is not applicable.

The details of the related party transactions entered into by the Company in the ordinary course of business at arm’s length basis are mentioned in the notes to the accounts forming part of the audited (standalone) financial statements for the financial year ended March 31, 2018.

During the financial year under review, the Related Party Transaction Policy was amended to align the same with the requirements of the amendments made to the relevant rules under the Companies Act, 2013.

Pursuant to Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, the Related Party Transaction Policy of the Company forms part of this Board’s report as "Annexure - 6”. The said policy is available on the website of the Company at URL https://www.dhfl.com/docs/ default-source/investors/related-party-transaction-policy-of-the-company/related-party-transaction-policy.pdf

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

There were no significant and material orders passed by any Regulator or Court or Tribunal which would impact the going concern status of the Company 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 a Management Assurance and Audit Department, which provides comprehensive audit coverage of functional areas and operations of the Company to examine the adequacy of and compliance with policies, procedures, statutory and regulatory requirements. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

The Audit Committee reviews and evaluates adequacy and effectiveness of the Company’s internal control environment and monitors the implementation of audit recommendations.

Management Assurance and Audit is an independent and objective assurance and consulting activity designed to add value and improve the Company’s operations. Management Assurance and Audit function is accountable to the Board of Directors through the Chairman of the Audit Committee. Management Assurance and audit also assist the management in identifying operational opportunities for revenue leakage, cost savings and revenue enhancements; ensures working within the regulatory and statutory framework and facilitate early detection and prevention of frauds.

The Audit Committee and Board of Directors have approved a documented framework for the internal financial control to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information and disclosures. The Audit Committee periodically 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 Directors of 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 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018, forms part of this Board’s report as "Annexure - 7”. The said report does not contain any qualification, reservation or adverse remark.

STATUTORY AUDITORS

Based on the recommendation of the Audit Committee, the Board of Directors, at their meeting held on May 16, 2018, have appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration Number 117366W/W-100018) commencing from the financial year 2018-19, as the Joint Statutory Auditors of the Company, subject to the approval of the Members of the Company to audit its financial statements along with the existing Statutory Auditors, M/s. Chaturvedi & Shah, Chartered Accountants (Firm Registration No. 101720W). M/s. Deloitte Haskins & Sells LLP shall hold office for the first term of five years, from the conclusion of the Thirty Fourth (34th) Annual General Meeting until the conclusion of the Thirty Ninth (39th) Annual General Meeting of the Company. The proposal for their appointment as the Joint Statutory Auditors of the Company is included in the Notice of the ensuing Annual General Meeting for approval of Members of the Company. M/s. Deloitte Haskins & Sells LLP has furnished written consent and a confirmation to the effect that they are not disqualified to be appointed as the Joint Statutory Auditors of the Company in terms of the provisions the Companies Act, 2013 and Rules framed there under. In terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, they have confirmed that they hold a valid certificate issued by the Peer Review Board of the ICAI.

Further, 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 from the conclusion of the 32nd Annual General Meeting until the conclusion of the 37th Annual General Meeting of the Company, in accordance with the provisions of the Companies Act, 2013 and will continue to be Joint Statutory Auditors of the Company till their term expires.

Notes to Accounts and Auditors Report

The notes to the accounts referred to in Auditors Report are self-explanatory and do not call for any further comments. The Statutory Auditors Report on the financial statements for the financial year 2017-18 does not contain any qualification, reservation or adverse remark.

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors would like to inform that the audited financial statements for the financial year ended March 31, 2018 are in conformity with the requirements of the Companies Act, 2013 and they believe that the financial statements reflect fairly the form and substance of transactions carried out during the year and reasonably present the Company’s financial condition and results of operations. These financial statements have been audited by M/s. Chaturvedi & Shah, Chartered Accountants (Firm Registration Number 101720W), the Statutory Auditors of the Company.

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

(a) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such Accounting Policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

REPORT ON CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, a separate Section titled ‘Management Discussion and Analysis’ forms part of this Annual Report.

Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate Section titled ‘Report on Corporate Governance’ forms part of this Annual Report which also includes certain disclosures that are required, as per the Companies Act, 2013.

The certificate by the Statutory Auditors confirming compliance with the conditions of Corporate Governance as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Board’s report as "Annexure - 8”. The said certificate for the financial year 2017-18 does not contain any qualification reservation or adverse remark.

BUSINESS RESPONSIBILITY REPORT

Pursuant to Regulation 34 (2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, a separate Section titled ‘Business Responsibility Report (BRR)’ forms part of this Annual Report which describes the Company’s performance and activities from environmental, social and governance perspective. The BRR is also available on the website of the Company at URL: https://www.dhfl.com/docs/default-source/investors/annual-reports/2017-2018/business-responsibility-report-fy-2017-18.pdf.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return as at March 31, 2018, in the prescribed form MGT 9, forms part of this Board’s report as "Annexure - 9”.

FUTURE OUTLOOK

With the Government’s thrust on "Housing for All” by year 2022 followed by the initiatives taken there under viz., funding massive construction activities, lower GST rates etc., it clearly indicates that housing construction and housing finance are the two main industry segments that will see a phenomenal growth in the years ahead. Adding to the same, the Government in its Budget for 2018-19 had announced establishment of a dedicated affordable housing fund under National Housing Bank’s supervision through various funding measures. The two major reforms like demonetization and Real Estate (Regulation and Development) Act, 2016 (RERA) have also left a positive impact on the housing sector

Your Company has developed a business model on attractive suite of products to cater to the lower and middle income groups, which are concentrated in tier two and three cities from where higher demand for affordable housing is foreseen. Your Company expects the financial year 2018-19 to be another year of growth for the housing finance sector

ACKNOWLEDGEMENTS

Your Directors wish to place on record their gratitude for the continued support of various authorities including the National Housing Bank, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India, Ministry of Corporate Affairs, Registrar of Companies, Financial Intelligence Unit India; and also for support and faith reposed in the Company by the Customers, Bankers and other Lenders, Members, Debenture holders, Trustees, Depositors and others. The Board also places on record its deep appreciation for the significant contributions made by its employees at all levels and for the dedication and commitment of the employees as a result of their hard work, co-operation and support, the Company has been able to maintain its consistent growth. The Directors would also like to thank the BSE Limited, the National Stock Exchange of India Limited, National Securities Depository Limited, Central Depository Services (India) Limited and the Credit Rating Agencies for their continued co-operation.

For and on behalf of the Board

Kapil Wadhawan

Chairman & Managing Director

(DIN-00028528)

Place: Mumbai

Date: May 16, 2018

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