Mar 31, 2018
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.
Boardâs 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 Companyâs 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 Companyâs 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 Governmentâs vision of "Housing for All by 2022â. 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 Companyâs 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 Companyâs 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 yearâs 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 Boardâs report i.e. May 16, 2018 except as disclosed in this Boardâs 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 Companyâs 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 Boardâs report as "Annexure - 1â.
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 Companyâs 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 Companyâs 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 Companyâs 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 Companyâs 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 NHBâs 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 Companyâs 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 Companyâs 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 Companyâs 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 Boardâs report as "Annexure - 2â. 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 Companyâs 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 âDHFL Changing Lives Foundationâ, a Non-Profit Company, limited by guarantee, registered under Section 8 of the Companies Act, 2013 on December 1, 2017 to take forward the Companyâs CSR Vision and implement social programmes in a far more collaborative and participative way. DHFL Changing Lives Foundation has initiated implementing the Companyâs 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) ("DPLIâ) , 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 ("Prudentialâ). In order to unlock the value of the Companyâs 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 "DPAMPLâ) the Asset Management Company of DHFL Pramerica Mutual Fund (formerly known as Pramerica Mutual Fund, hereinafter referred to as "DPMFâ) and DHFL Pramerica Trustees Private Limited (formerly known as Pramerica Trustees Private Limited, hereinafter referred to as "DPTPLâ), 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 Companyâs Human Resource team is a strategic partner to the organizationâs 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 Companyâs 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 Companyâs 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 Orientationâ the exclusive monthly induction program for the new recruits is conducted to give an overall view of the Companyâs 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 Companyâs 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 Companyâs 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 employeeâs 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 Boardâs report as "Annexure-3â.
(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 Boardâs 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 2015â/"the Planâ) 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 Companyâs 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 Boardâs report as "Annexure-4â 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 equipmentâs 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 companyâs 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 Directorsâ and Officersâ Liability Insurance Policy which covers the Companyâs 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 transitâ for the Companyâs 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 Companyâs 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 BOARDSâ 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 Companyâs 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 Boardsâ 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 Directorâs 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 âDHFL Changing Lives Foundationâ, for implementing the Companyâs CSR programmes. The Annual Report on CSR activities forms part of this Boardâs report as "Annexure - 5â.
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 Chairmanâs 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 âGhar Jaisa Loanâ was also created, which infers loan according to customerâs 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 Chairmanâs 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 âSharmaji & Vinodjiâ 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 âGriha Utsav - Property Expo and Home Loan Melaâ 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 Indyâs 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 âAisa Desh Ho Meraâ 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 MIGâ 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 Indiaâs 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 âHome Loan Dilseâ 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 Companyâs 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 banksâ 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, Stakeholdersâ 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 Committeeâ 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 Committeeâ 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 armâs 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 armâs 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 Boardâs report as "Annexure - 6â. 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 Companyâs 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 Companyâs 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 Companyâs 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 Boardâs report as "Annexure - 7â. 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.
DIRECTORSâ 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 Companyâs 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 âManagement Discussion and Analysisâ 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 âReport on Corporate Governanceâ 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 Boardâs report as "Annexure - 8â. 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 âBusiness Responsibility Report (BRR)â forms part of this Annual Report which describes the Companyâs 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 Boardâs report as "Annexure - 9â.
FUTURE OUTLOOK
With the Governmentâs thrust on "Housing for Allâ 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 Bankâs 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
Mar 31, 2017
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, 2017.
KEY FINANCIALS
The financial performance of the Company for the financial year ended March 31, 2017, is summarized below:
(Rs. in crore)
Particulars |
Standalone Consolidated |
|||
2016 - 17 |
2015 -16 |
2016-17 |
2015-16 |
|
Gross Income |
8,857.23 |
7,299.99 |
9,615.64 |
7,839.92 |
Less : Interest |
6,653.61 |
5,490.03 |
6,674.37 |
5,491.95 |
Overheads & Provisions |
777.93 |
683.49 |
1,477.01 |
1,197.24 |
Depreciation |
23.30 |
24.30 |
43.46 |
29.84 |
Profit Before Tax and Exceptional item |
1,402.39 |
1,102.17 |
1,420.80 |
1,120.90 |
Add : Exceptional item |
1,969.43 |
- |
1,855.45 |
- |
Profit after Exceptional item and Before Tax |
3,371.82 |
1,102.17 |
3,276.25 |
1,120.90 |
Less : Provision for taxation |
475.37 |
372.97 |
479.90 |
376.75 |
Profit After Tax |
2,896.45 |
729.20 |
2,796.35 |
744 .15 |
Add : Net share of profit from Associates |
- |
- |
9.95 |
5 .15 |
Add : Balance brought forward from the previous year |
643.68 |
575.56 |
731.89 |
639.74 |
Net Gain on dilution of Associate |
- |
- |
3.45 |
3.93 |
Surplus available for appropriations |
3,540.13 |
1,304.76 |
3,541.64 |
1,392.97 |
Appropriations |
||||
Transferred to Statutory Reserve under Section 36(1) (viii) of the Income Tax Act, 1961 read with Section 29C of National Housing Bank Act, 1987 |
580.00 |
180.00 200.00 0.02 |
580.00 |
180.00 200.00 0.02 |
Transferred to General Reserve |
200.00 |
200.00 |
||
Transferred to Debenture Redemption Reserve (DRR) |
1,170.00 |
1,170.00 |
||
Dividend for Earlier Year |
- |
- |
||
Interim Dividend(s) |
31.30 |
175.07 |
31.30 |
175.07 |
Proposed Equity Dividend |
- |
58.36 |
- |
58.36 |
Tax on Dividend |
6.37 |
47.63 |
6.37 |
47.63 |
Adjustment pursuant to capital reduction scheme |
- |
- |
270.18 |
- |
Balance carried over to Balance Sheet |
1,552.46 |
643.68 |
1,283.79 |
731.89 |
Total |
3,540.13 |
1,304.76 |
3,541.64 |
1,392.97 |
Earnings Per Share |
||||
Basic (in â) |
95.76 |
25.00 |
92.78 |
25.69 |
Diluted (in â) |
95.44 |
23.10 |
92.47 |
23.73 |
Appropriations from Net Profit are as detailed in the table given above
TRANSFER TO RESERVES
During the financial year under review, your Company transferred Rs.200 crore to the General Reserve and Rs.580 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.1,552.46 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 Companyâs 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, the Company has proportionately adjusted its opening reserves with an amount of Rs.83.23 crore as contingent deferred tax liability during the year and unamortized amount against the same is Nil. Deferred Tax Liability on current year special reserve has been charged to Statement of Profit & Loss amounting to Rs.39.46 crore.
PERFORMANCE
Your Companyâs inception 33 years ago was based on the fundamental necessity of enabling home ownership for customers in the Lower and Middle Income [LMI] and Economically Weaker Sections (EWS) segments. A journey of over three decades and an increasing awareness at national level on the need for promoting affordable housing have together placed your Company in a strong position today. It stands tall as one of Indiaâs largest housing finance companies, working towards its mission of reaching out to millions of customers and helping them fulfill their dreams of owning a home.
During the last financial year, the Government of India took several noteworthy steps to build a conducive environment for growth of the affordable housing sector which has created a strong momentum for your Company to fulfill its vision and goals.
Your Company has been swift and agile to leverage these growth enablers and opportunities. During the financial year under review, your Company has reported robust performance, witnessing a steady increase in revenues and profits. A key aspect of your Companyâs industry position and operating performance has been its emergence as a comprehensive financial services provider and continued efforts to broaden its services bouquet with a range of loan and deposit products while also offering insurance products, third party life and general insurance, for customers within the LMI, EWS segments to help them de-risk their families and property in case of any eventualities. Being one of the few housing finance companies eligible to mobilize fixed deposits from the public, your Company extends unique fixed deposit schemes tailored to suit the financial needs of various segments.
Your Company continues to expand its extensive network across the country to reach out to every potential customer across Tier II and III towns, cities and its peripheral suburbs. The business vertical strategy adopted for the Companyâs home loan and non-home loan businesses has achieved the desired objective of greater business focus and leveraging synergies. Your Companyâs SME loans business continues to thrive and achieve the desired penetration in medical equipment, plant & machinery and property term loans.
Your Company has set a historic trend in the retail debt market through two public Non-Convertible Debentures issuances during the financial year 2016-17 by raising a record of Rs.14,000 crore within one month. This has repositioned your Companyâs borrowing portfolio and generated a much more competitive cost of borrowing.
During the financial year under review, your Company has successfully completed the sale of its entire equity stake held in DHFL Pramerica Life Insurance Company Limited (DPLI) [representing 50% equity share capital of DPLI] to DHFL Investments Limited (DIL), a wholly owned subsidiary of the Company for a consideration of Rs.2,000.50 crore. The transaction adds Rs.1,969.43 crore to the Companyâs Net Worth. This also ensures that your Company is well capitalised enabling it to pursue its aggressive and ambitious growth plans over the next few years.
Standalone
During the financial year ended March 31, 2017 and March 31, 2016, your Company made total loan disbursements of Rs.28,581.90 crore and Rs.24,202.22 crore, respectively. As on March 31, 2017 and March 31, 2016, the Gross NPAs as a percentage of the outstanding loans were 0.94% and 0.93%, respectively. The net NPAs as a percentage of the outstanding loans were 0.58% in both the financial years 2016 and 2017, which are substantially lower than industry benchmarks.
Your Companyâs strong marketing and distribution network has its presence across 348 locations throughout India as of March 31, 2017. Besides, your Company has its presence through its international representative offices in London and Dubai. This yearâs total income was Rs.8,857.23 crore as against Rs.7,299.99 crore during the previous financial year and total expenditure was Rs.7,454.84 crore, compared to Rs.6,197.82 crore during the previous financial year. Your Companyâs
Assets under Management (AUM) stood at Rs.83,559.92 crore as on March 31, 2017, as against Rs.69,523.88 crore in the previous financial year.
For the financial year under review, the Profit before exceptional item and taxes stood at Rs.1,402.39 crore as against Rs.1,102.17 crore in the previous financial year and Profit after Tax is at Rs.2,896.45 crore as against Rs.729.20 crore in the previous financial year.
During the financial year under review, your Company has reported an exceptional profit of Rs.1,969.43 crore which primarily represents sale of the Companyâs entire equity stake held in DHFL Pramerica Life Insurance Company Limited. The Profit after this exceptional item and before taxes for the current financial year was Rs.3,371.82 crore
Consolidated
During the financial year under review, your Companyâs total revenue on consolidated basis stood at Rs.9,615.64 crore, higher than 22.65% in the previous financial year. The overall operational expenses for the financial year under review was Rs.8,194.84 crore, as against Rs.6,719.02 crore in the previous year. Operating profit before tax and exceptional item improved to Rs.1,420.80 crore as compared to Rs.1,120.90 crore in previous financial year 2015-16. During the financial year under review, your Company has reported an exceptional profit of Rs.1,855.45 crore on sale of its entire equity stake in DHFL Pramerica Life Insurance Company Limited. The yearâs Profit after Tax attributable to the Company stands at Rs.2,806.30 crore, as against Rs.749.30 crore in the previous financial year.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments, affecting the financial position of your Company, which have occurred between the end of the financial year of the Company, i.e. March 31, 2017 and the date of this Boardâs report i.e. May 3, 2017.
DIVIDEND
Your Directors at their meeting held on October 17, 2016 had declared interim dividend for the financial year 2016-17 of Rs.1/- per equity share on 31,30,28,058 fully paid up equity shares of Rs.10/- each of the Company. The Board of Directors at their meeting held on May 3, 2017 have recommended a final dividend of Rs.3/- per equity share for the financial year ended March 31, 2017 in terms of the Dividend Distribution Policy approved by the Board of Directors of the Company. Therefore, the total dividend for the financial year 2016-17 aggregates to Rs.4/- 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 Friday, July 21, 2017. The total outgo on account of dividend (excluding dividend tax) will be Rs.125.25 crore, for the current financial year 2016-17, as against Rs.233.45 crore in the previous financial year.
TRANSFER OF AMOUNT TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, (erstwhile Sections 205A & 205C of the Companies Act, 1956) read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and amendments thereof, the amounts pertaining to dividends/ deposits that remained unclaimed and unpaid for a period of seven years from the date it became first due for payment, have been transferred from time to time, to respective Investor Education and Protection Fund (IEPF) on the due dates and all relevant compliances have been done by the Company and no claims in this respect shall lie against the Company.
Pursuant to the provisions of erstwhile Investor Education and Protection Fund (Uploading of information regarding Unpaid and Unclaimed amounts lying with companies) Rules, 2012, the Company has uploaded the details of unclaimed amounts lying with the Company as on July 20, 2016 (i.e. date of last AGM) on the website of the Company (www.dhfl.com) and also filed with the Ministry of Corporate Affairs. Further as per Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, details of unclaimed amounts lying with the Company as on March 31, 2017 was filed with the Ministry of Corporate Affairs.
Unpaid /Unclaimed Dividend
During the financial year under review, your Company has transferred unclaimed final dividend of Rs.0.06 crore pertaining to the financial year 2008-09 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.0.12 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.
Pursuant to Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, [IEPF Rules] your Company had initiated the actions as laid down under the IEPF Rules and accordingly the communication letters were sent to all the shareholders of the Company whose dividend had remained unclaimed for past seven years and a public notice in this regard was also published in English and Marathi newspapers.
Members and Depositors of the Company are requested to claim their unclaimed dividend/deposit, if any, and for the purpose may correspond with the Company Secretary or the Registrar and Share Transfer Agent. Members and Depositors of the Company are requested to note that any dividend/ deposit remaining unclaimed/unpaid for a period of more than seven (7) years, will be transferred to the IEPF, as per the provisions of Companies Act. Members to further note that as per the provisions of Section 124 of the Companies Act, 2013 read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules 2016, the shares in respect of which the dividend has not been claimed for seven (7) consecutive years shall be transferred to the IEPF.
LENDING OPERATIONS
The sanctions and disbursements of housing and other loans, during the financial year ended March 31, 2017, were Rs.39,846.28 crore and Rs.28,581.90 crore respectively, as against Rs.37,608.13 crore and Rs.24,202.22 crore, respectively, in the previous financial year. The Companyâs cumulative loan disbursement since inception was Rs.1,31,415.84 crore.
Securitisation / Assignment of Loans
During the financial year under review, your Company has sold/ assigned multiple pools of housing loans aggregating to Rs.3,609.15 crore and other non-housing loans aggregating to Rs.1,388.83 crore. Your Company will, however, continue to collect the 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.
During the financial year under review, your Company has also securitized, housing loan contracts amounting to Rs.885.68 crore, by way of Senior Series A1 Pass Through Certificate (PTCs) issued by SPVs. These PTCs have been granted the highest rating of AAA (SO) by the external credit rating agencies involved in the process.
Your Company has subscribed to an amount of Rs.37.31 crore in these Senior A1 Pass Through Certificates (PTCs), in compliance with the Minimum Retention Requirement (MRR) prescribed by RBI in its Guidelines on Securitization issued in 2012. In addition, your Company has provided Cash Collateral in the form of First Loss Credit Facility (FLCF) as a line of defense for Senior A1 PTC Holders, for a cumulative amount of Rs.68.48 crore, as specified by the respective rating agencies.
Your Company has securitized a pool of home loan contracts with a Mortgage Guarantee extended by India Mortgage Guarantee Corporation Pvt. Ltd (IMGC). The guarantee from IMGC helps in mitigating credit losses. IMGCs role as a First Loss Provider also helps your Company in maintaining an optimum level of Cash Collateral.
Buyout of Home loan pools
During the financial year under review, your Company has purchased home loan pools in two tranches for a cumulative amount of Rs.308.63 crore. This buyout complies with the Reserve Bank of Indiaâs norms on Securitization, specific to Direct Assignment transactions, in terms of Minimum Holding Period (MHP) and Minimum Retention Requirement (MRR).
Loan Book
As at March 31, 2017, the loan book stood at Rs.72,096.18 crore, as against Rs.61,775.02 crore in the previous financial year.
SHARE CAPITAL
(A) Authorized Share Capital
During the financial year under review, pursuant to the approval of the Members of the Company on February 20, 2017, the Authorized share capital was reclassified. The Authorized share capital of the Company as at March 31, 2017 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
The Issued and paid up equity share capital of the Company as at March 31, 2017 was Rs.313.15 crore divided into 31,31,52,205 equity shares of Rs.10/each as compared to Rs.291.80 crore divided into 29,17,97,988 equity shares of Rs.10/- each as at March 31, 2016. The increase was mainly on account of issuance and allotment of following equity shares:
(a) 2,12,30,070 (Two crore Twelve lakh Thirty thousand and Seventy) equity shares of face value Rs.10/- each to Wadhawan Global Capital
Private Limited (WGCPL), a promoter group entity owing to conversion of warrants allotted during the previous financial year, upon receipt of balance 75% of the total consideration amount i.e. Rs.375 Crore as per the applicable provisions of Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended and applicable provisions of the Companies Act, 2013, including rules made thereunder.
(b) 1,24,147 equity shares of Rs.10/- each, upon exercise of options (employee stock appreciation rights) by the eligible employees of the Company pursuant to Dewan Housing Finance Corporation Limited-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
During the financial year under review, the Members of the Company on February 20, 2017, approved the issuance of Non- Convertible Redeemable Cumulative Preference Shares amounting to Rs.750 crore (including the premium amount of Rs.500 crore), by way of a special resolution passed through Postal Ballot. However, no preference shares were issued by the Company, during the financial year 2016-17.
RESOURCE MOBILISATION
Your Companyâs borrowing policy is under the control of the Board. The Company has vide special resolution passed by means of postal ballot on June 12, 2014, under Section 180(1)(c) of the Companies Act, 2013, 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 Rs.1,00,000 crore and the total amount so borrowed shall remain within the limits as prescribed by National Housing Bank.
Your Company continued to use a variety of funding sources to optimize funding costs, protect interest margins and maintain a diverse portfolio which further strengthened its funding stability and liquidity needs. Your Company continued to keep tight control over the cost of borrowings through negotiations with lenders and thus, raised resources at competitive rates from its lenders while ensuring proper asset liability match.
The twin NCD issuances have not only established a strong yield curve for your Companyâs financial instruments in the market but has also repositioned its borrowing portfolio into a more balanced mix of bank borrowings (41.90%), debt market instruments (41.80%), deposits (8.40%), National Housing Bank (4.00%) and External Commercial Borrowings (3.90%) and a better maturity profile.
The weighted average borrowing cost as at March 31, 2017 was 8.83% as against 9.67% in the previous year.
Your Companyâs total borrowings amounted to Rs.81,341.24 crore as at March 31, 2017, as against Rs.61,103.66 crore in the previous year. The Companyâs Asset-Liability 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 2016-17, as well. Another strategy adopted to keep a balanced ALM 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.
Public Issue of Non-Convertible Debentures [NCDs]
During the financial year under review, your Company made its maiden public issue of Secured Redeemable Non-Convertible Debentures of Rs.4,000 crore which was subscribed 18.65 times of the base issue size of Rs.1000 crore setting a benchmark in the capital markets. Your Company also made a follow on public issue of Secured Redeemable Non-Convertible Debentures of Rs.10,000 crore which was also subscribed to the extent of 6.34 times of the base issue size of Rs.2,000 crore. The proceeds of the aforesaid issuances were utilized for the purpose for which they were raised, largely towards business purposes, pre-payment/repayment of high cost borrowings. The outstanding balance of these Debentures as on March 31, 2017 amounts to Rs.14,000 crore.
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 resolutions passed by the Members of the Company and Policy for private placement of Non-Convertible Debentures (NCDs) of the Company formulated as per the guidelines issued by National Housing Bank.
Non-Convertible Secured Redeemable Debentures
During the financial year under review, your Company issued Secured Redeemable Non-Convertible Debentures on private placement basis amounting to Rs.2,550.90 crore to banks and financial institutions. The outstanding balance of these Debentures including accrued premium on zero coupon NCDs as on March 31, 2017 amounts to Rs.14,829.52 crore. The proceeds of the aforesaid issues were utilized for making disbursement to meet the housing finance requirements of the borrowers, as well as for general corporate purposes.
Non- Convertible Subordinated Unsecured Debentures
During the financial year under review, your Company raised Rs.400 crore through issue of Non- Convertible Subordinated Unsecured Debentures on private placement basis. As at March 31, 2017, your Companyâs outstanding subordinated debts were Rs.1,506.80 crore. The debt is subordinated to present and future senior indebtedness of your Company.
Non- Convertible Perpetual Unsecured Debentures
During the financial year under review, your Company has raised Rs.475 crore through issuance of Non-Convertible Perpetual Unsecured Debentures. The outstanding as at March 31, 2017, amounts to Rs.660.70 crore.
Debenture Trustee Agreement(s) were executed in favour of Catalyst Trusteeship Limited (formerly known as GDA Trusteeship Limited) for twin Public issues of NCDs. Debenture Trustee Agreement(s) were executed in favour of Catalyst Trusteeship Limited (formerly known as GDA Trusteeship Limited) and IDBI Trusteeship Services Limited for NCDs issued on private placement basis.
During the financial year under review, the interest on Non Convertible 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 not 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 Debenture 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) Regulation, 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, 2017 DRR stands at Rs.1,170 crore.
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
As part of its liability management, your Company endeavors to diversify its resource base in order to achieve an appropriate maturity structure and minimize the weighted average cost of borrowed funds. Your Company continued to leverage on its long term relationship with banks and thus tied up fund based working capital limit to Rs.12,545 crore as at the end of financial year. Your Company also raised additional term loans from banks to the extent of Rs.8,975 crore during the financial year 2016-17 at competitive rates available in the market and continued its focus on domestic sources.
However, the twin Public issue of NCDs have helped your Company to diversify its borrowing profile and reduce dependency on wholesale borrowings particularly from banks. The share of bank borrowings in the total borrowings in the current financial year came down to 41.90% from 52.70% in the previous financial year.
Deposits
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.
Retail fixed deposits form an integral source of funding for your Company and the Company has taken several initiatives to make these deposits available throughout the country. As a result, the fixed deposit portfolio of your Company has seen a robust growth during the financial year 2017. The total deposits grew by 34.22% to Rs.6,768.65 crore as on March 31, 2017. During the financial year under review, your Company added 32,928 new deposit accounts taking the total number of depositor accounts to 2,65,156. This is a significant testimony of increasing customer confidence in your Company.
As of March 31, 2017, 10,183 depositors who did not claim the deposits (along with interest due thereon) were aggregating to Rs.76.74 crore. Depositors have been intimated regarding the maturity of their deposits, with a request to either renew or claim their matured deposits. Fixed Deposits accepted by the Company are secured appropriately to the extent of floating charge on approved securities and bank deposits created by way of Trust Deed, as per the directions/ guidelines issued by the National Housing Bank.
Your Company sends appropriate reminders to the depositors after the due date of maturity to claim their unclaimed repayment amount of deposits alongwith the interest due thereon.
Refinance from National Housing Bank (NHB)
During the financial year under review, your Company has been granted a sanction amounting to Rs.700 crore under the NHBâs refinancing schemes for HFCs. In the financial year 2016-17, your Company availed Rs.2,200 crore refinance from NHB which included Rs.1,500 crore sanctioned during the previous financial year.
Commercial Papers
As at March 31, 2017, Commercial Papers outstanding amount stood at Rs.2,995 crore.
External Commercial Borrowings (ECBs)
During the financial year under review, your Company has availed External Commercial Borrowings (ECBs) amounting to Rs.1,007.59 crore under two different facilities - (a) an ECB facility of USD 130mn (Rs.874.15 crore) in the form of a syndicated loan facility, (b) an ECB of USD 20mn (Rs.133.44 crore) from DEG-Deutsche Investitions- und Entwicklungsgesellschaft mbH, Germany. The ECBs were raised under the Low Cost Affordable Housing Scheme of the Reserve Bank of India (RBI). Both the subject ECBs have a maturity of five years. According to the provisions of the RBI guidelines, these borrowings have been swapped into rupees for the entire maturity by way of principal only swaps.
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 FOR THE BORROWINGS
The security details of the aforesaid secured borrowings made by the Company are mentioned at Note No. 6 in the Notes to accounts forming part of the audited (standalone) financial statements for the financial year ended March 31, 2017.
CREDIT RATINGS
The Companyâs borrowings enjoy the following Credit Ratings:
Nature of |
Rating / Outlook |
|||
Borrowing |
CARE |
Brickworks |
ICRA |
CRISIL |
Short-Term Debt / Commercial Paper |
ICRA A1 |
CRISIL A1 |
||
Public (fixed) deposits/ Short Term Deposits |
CARE AAA (FD); Stable |
BWR FAAA; Stable |
CRISIL A1 |
|
Subordinated debt |
CARE AA ; Stable |
BWR AAA; Stable |
- |
- |
NCDs |
CARE AAA; Stable |
BWR AAA; Stable |
||
IPDIs |
CARE AA; Stable |
BWR AA ; Stable |
- |
- |
Long-term bank loans |
CARE AAA; Stable |
- |
- |
- |
Structured obligations |
CARE AAA(SO) |
- |
ICRA AAA(SO) |
CRISIL AAA(SO) |
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, apart from the loans made, guarantee given or security provided by the Company in the ordinary course of business are given in the Notes to accounts forming part of the audited (standalone) financial statements for the financial year ended March 31, 2017.
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 stand-alone basis. The following table sets out the Companyâs Capital Adequacy Ratios as at March 31, 2015,2016 and 2017:
Particulars |
As on March, 31 |
||
2017 |
2016 |
2015 |
|
Capital Adequacy Ratio |
19.12% |
16.74% |
16.56% |
The Capital Adequacy Ratio (CAR) of your Company was at 19.12% as on March 31, 2017, 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 Non Performing Assets (NPAs), under the 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 Companyâs gross NPAs, net NPAs, cumulative provisions and write-offs for the periods indicated:
(Rs. in crore)
Particulars |
As of March 31 |
||
2017 |
2016 |
2015 |
|
Gross Non-Performing Assets |
678.45 |
573.07 |
485.05 |
% of Gross NPA to Total Loan Portfolio |
0.94% |
0.93% |
0.95% |
Net Non-Performing Assets |
419.43 |
361.02 |
345.95 |
% of Net NPA to Total Loan Portfolio |
0.58% |
0.58% |
0.68% |
Total cumulative provision- loans and other assets |
714.19 |
583.02 |
430.15 |
Write-off |
87.49 |
21.46 |
6.20 |
Recovery & Collections
The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI Act) has proved to be a useful recovery tool and the Company has been able to successfully initiate recovery action under the provisions of this Act, against the defaulting borrowers. The 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.
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 upto 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.470.88 crore by way of income from mutual funds & other treasury operations and Rs.236.59 crore by way of interest on bonds (including 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, 2017, your Company has invested Rs.425.30 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 for Rs.430.84 crore. It is being maintained within the limits prescribed by National Housing Bank.
SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE COMPANIES
As on March 31, 2017, your Company has two wholly owned subsidiaries, three joint venture(s) and four 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,which forms part of this Boardâs report as âAnnexure - 1â. 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 Companyâs 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 in the previous financial year. During the financial year under review, DAIPL made an investment of Rs.300 crore and acquired 32.88% stake in the equity share capital of the joint venture entity i.e. DHFL Pramerica Asset Managers Private Limited.
The main object of DAIPL is , inter-alia, to carry on the business of providing all kinds of advisory/consultancy services and fee based intermediation activities and it earned an advisory fees of Rs.0.05 crore during the financial year ended March 31, 2017.
DHFL Investments Limited (DIL)
During the financial year under review, your Company incorporated DHFL Investments Limited as its wholly owned subsidiary. 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.
During the financial year under review, pursuant to receipt of all the regulatory approvals, your Company on March 31,2017 sold its entire stake in DHFL Pramerica Life Insurance Company Limited (âDPLIâ) (representing 50% of the paid up equity share capital of DPLI) to DIL at a fair market value of Rs.2000.50 crore as determined by an internationally reputed actuarial consultant. In order to fund the acquisition, DIL also raised a sum of Rs.1,901 crore from Wadhawan Global Capital Private Limited [âWGCâ] (promoter group entity) by way of issue of Compulsorily Convertible Debentures [CCDs] 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 after the expiry of 110 months.
Highlights of Performance of Joint Ventures
DHFL Pramerica Life Insurance Company Limited
Your Company had acquired 50% equity stake in DHFL Pramerica Life Insurance Company Limited (erstwhile DLF Pramerica Life Insurance Company Limited) (âDPLIâ) , 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 (âPrudentialâ). The Companyâs investment in DPLI (including the original cost of acquisition) was approximately Rs.31,06,89,296 (Rupees Thirty One Crore Six lakh Eighty Nine Thousand Two Hundred and Ninety Six only). In order to unlock the value of the Companyâs investment in DPLI, with the approval of Board of Directors, the Members of the Company and relevant regulatory authorities, the entire equity stake held in DPLI was sold to DIL, a wholly owned subsidiary, at fair market value of Rs.2,000.50 crore determined by internationally reputed actuarial consultant. Your Company earned a profit of Rs.1,969.43 crore on the DPLI stake sale.
As at March 31, 2017, the net worth of DPLI stood at Rs.853.04 crore and its Profit before tax grew by 21% at Rs.70.42 crore for financial year 2017 as against Rs.58.36 crore for financial year 2016. The Assets under Management of DPLI stood at Rs.2,707.4 crore as at March 31, 2017 as against Rs.2,071.6 crore as at March 31, 2016. DPLI has presence in 28 states.
DHFL Pramerica Asset Managers Private Limited & DHFL Pramerica Trustees Private Limited
During the previous financial year, your Company had entered into a joint venture with PGLH of Delaware, (a wholly-owned indirect subsidiary of Prudential Financial Inc.) pursuant to which it acquired 50% of the equity share capital of DHFL Pramerica Asset Managers Private Limited (formerly known as Pramerica Asset Managers Private Limited, hereinafter referred to as âDPAMPLâ) the Asset Management Company of DHFL Pramerica Mutual Fund (formerly known as Pramerica Mutual Fund, hereinafter referred to as âDPMFâ) and DHFL Pramerica Trustees Private Limited (formerly known as Pramerica Trustees Private Limited, hereinafter referred to as âDPTPLâ), 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.
During the financial year under review, consequent to the approval of Honâble High Court of Bombay, DPAMPL reduced and consolidated its issued, subscribed and paid up share capital pursuant to the relevant provisions of the Companies Act, 2013.
As at March 31, 2017, your Company holds 50% equity stake in DPAMPL (directly 17.12% and 32.88% through its wholly owned subsidiary, DAIPL) and DPTPL, respectively.
As on March 31, 2017, the net worth of DPAMPL stood at Rs.130.40 crore with a Profit before tax of Rs.7.65 crore for financial year 2017 as against a loss of Rs.32.62 crore for financial year 2016 and its year to date average Assets under Management grew by 20% being in line with the industry growth rate of 26%. DPAMPL has presence in 8 states.
Highlights of Performance of Associate Companies
Aadhar Housing Finance Limited (Aadhar)
Aadhar Housing Finance Limited, a housing finance company registered with National Housing Bank (NHB) with equity participation from International Finance Corporation (IFC), a member of the World Bank group, focuses on providing home loans to the needy in the backward regions of the country.
During the financial year under review, your Company did not subscribe to rights issue made by Aadhar, which resulted in proportionate dilution of the existing shareholding percentage of the Company in Aadhar. As a result, as on March 31, 2017 the percentage of shareholding of your Company in Aadhar stood at 12.37% of the paid-up equity share capital.
As at March 31, 2017 the net worth of Aadhar stood at Rs.224.41 crore and its Profit before tax grew by 112.93% at Rs.61.68 crore for financial year 2017 as against Rs.28.96 crore for financial year 2016. The Assets under Management of Aadhar stood at Rs.3,183.83 crore as at March 31, 2017 as against Rs.1,811.39 crore as at March, 31, 2016. Aadhar has presence in 13 states.
DHFL Vysya Housing Finance Limited (DHFL Vysya)
DHFL Vysya, a housing finance company registered with National Housing Bank (NHB) caters to the lower and middle income segment mostly in the southern regions of the country and in two states in the northern region. As on March 31, 2017 the percentage of shareholding of your Company stood at 9.47% of the paid-up equity share capital of DHFL Vysya.
As at March 31, 2017, the net worth of DHFL Vysya stood at Rs.153.73 crore and its Profit before tax decreased by 10.62% at Rs.35.76 crore for financial year 2017 as against Rs.40.01 crore for financial year 2016. The Assets under Management of DHFL Vysya stood at Rs.1,807.60 crore as at March 31, 2017 as against Rs.1,467.57 crore as at March 31, 2016. DHFL Vysya has presence in 7 states.
The Board of Directors of DHFL Vysya and Aadhar respectively, have approved the scheme of amalgamation of DHFL Vysya (Transferee) and Aadhar (Transferor), pursuant to which both the entities have filed their respective applications for seeking approval for amalgamation in terms of the applicable provisions of Companies Act, 2013 with National Company Law Tribunal.
Avanse Financial Services Limited (Avanse)
Avanse Financial Services Limited, a non-banking financial company registered with Reserve Bank of India is education Loan Company, which kindles and supports aspirations of higher education in India & overseas and also provides education institution loan.
As on March 31, 2017 the percentage of shareholding of your Company stood at 36.78% of the paid-up equity share capital of Avanse.
As at March 31, 2017 the net worth of Avanse stood at Rs.140.25 crore and its Profit before tax grew by 121.71% at Rs.5.72 crore for financial year 2017 as against Rs.2.58 crore for financial year 2016. The Assets under Management of Avanse stood at Rs.982.25 crore as at March 31, 2017 as against Rs.529.63 crore as at March 31, 2016. Avanse has presence in 13 Locations.
DHFL Ventures Trustee Company Private Limited (DHFL Ventures)
DHFL Ventures is a Company which acts as a trustee company of venture capital funds and alternative investment funds.
During the financial year under review, your Company has 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, 2017 the net worth of DHFL Ventures stood at Rs.0.054 crore and its Profit before tax was Rs.0.02 crore for financial year 2017. The total assets of DHFL Ventures stood at Rs.0.08 crore as at March 31, 2017 as against Rs.0.072 crore as at March 31, 2016.
INFORMATION TECHNOLOGY
Your Companyâs technology transformation programme (Tech2.0) in association with IBM is a journey towards digital transformation to enhance customer and employee experience. In addition, your Company is exploring advanced technological solutions in the areas of data analytics, mobility and cloud.
This programme will help your Company to align its technology landscape to meet its evolving business needs, improve its customer centricity and will enable faster decision making through automation and analytics.
HUMAN RESOURCES
Your Company today is a valued employer brand with a compelling employee value proposition. Your Company consistently focuses on talent acquisition and retention to ensure sustainable growth. Your Companyâs initiatives are aligned with its overall mission and strategy. It has adopted new technologies and has implemented employee-centric policies and practices to strike a balance between business needs and individual aspirations.
Your Company significantly invests in professional development and provides career development opportunities for its employees. A robust development framework and a blend of classrooms with on-line and on-the-job training, aligned to the Companyâs business objectives and career path of individuals, provides the employees with opportunities to excel in their work and be well equipped for future roles.
The leadership competency framework enables your Company to identify potential leaders; and ensures that your Company has a ready talent pool to take up next level 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 perform, grow, and stay in the Company. Your Company works on the belief that every great workplace is marked by synergistic and gender diverse teams and a diverse workplace is benefitted with improved business performance, better corporate governance and stronger brand image.
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 and leadership development, and best-in-class processes and policies. The overriding objective is to foster a culture of excellence and ownership.
Learning and Development
Your Companyâs 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 2,745 on roll employees and 1,741 off roll employees, covering a wide range of functional areas including sales skill development programs, credit analytical skills, appraisal techniques, fraud & risk management. âOrganization Orientationâ the exclusive monthly induction program for the new recruits is conducted to give an overall view of the Companyâs vision and mission. Similarly, programs based on soft skills and monitoring techniques were also conducted and 953 employees were covered.
In keeping with its importance and in compliance with National Housing Bank norms, trainings on KYC & AML Policies 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 2.33% 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 Companyâs 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 Companyâs 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 employeeâs 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 Boardâs report as âAnnexure-2â.
(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 Boardâs 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 OPTION SCHEME (ESOS)/ 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, ESOS - 2008, ESOS - 2009 - Plan II and ESOS - 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.
During the financial year 2014-15, the Members of the Company, approved âDewan Housing Finance Corporation Limited - Employee Stock Appreciation Rights Plan 2015â (DHFL ESAR 2015) in accordance with the provisions of SEBI SBEB Regulations and issuance of stock appreciation rights (âESARsâ) through DHFL ESAR 2015, exercisable into not more than 51,46,023 fully paid up equity shares in the aggregate having face value of Rs.10/- each. Pursuant to the subject approval, the Nomination and Remuneration Committee on March 21, 2015 approved Grant I of 15,50,100 ESARs under DHFL ESAR 2015 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. Consequent to the bonus shares issued by the Company in the ratio of 1:1 during the previous financial year the total number of ESARs also increased in the same ratio.
During the financial year under review, the Company has allotted from time to time 1,24,147 equity shares of Rs.10/each on exercise of 3,47,200 ESARs, to the eligible employees under Grant I of DHFL ESAR 2015.
During the financial year under review, Nomination and Remuneration Committee on November 17, 2016 approved Grant II of 20,81,545 ESARs under DHFL ESAR 2015 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
The Companyâs 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. There has been no variation in the terms of the options/ESARs granted under any of these schemes/plan.
The Company has received a certificate from its auditors confirming that the 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 2016-17, forms part of this Boardâs report as âAnnexure-3â 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.0.30 crore at various locations, towards the installation of energy conservation equipmentâs such as replacement of CFL (Compact Fluorescent Lamp) with LED (Light- Emitting Diode) lights, energy saving Air-conditioners, replacement of normal tube lights with T5 lights at the new branches and in the renovated branches. The Company has also installed at 3 locations Solar panel systems which are used as an alternate source of energy. 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 NHB, in promoting energy efficient homes.
B. Technology Absorption
Your Company actively engages itself towards technology advancements to serve its customers better and to create technology friendly environment for its employees which in turn helps them to manage the processes efficiently and economically.
The current technology transformation programme has been initiated to bring the Companyâs technology platform to a new level. The programme aims to identify and implement best-fit solutions for all the processes and functions viz, loan origination and management, customer relationship management, financial accounting and management, collections management, property information management systems, business systems (enterprise) integration, business intelligence and advanced analytics.
C. Foreign Exchange Earnings and Outgo
There were no foreign exchange earnings during the year.
The information on foreign exchange outgo and expenditure is furnished at Note No. 34 in the Notes forming part of the audited (standalone) financial statements for the financial year ended March 31, 2017.
INSURANCE
Your Company has insured its various properties and facilities against the risk of fire, theft and other perils, etc. and has also obtained Directorsâ and Officersâ Liability Insurance Policy which covers the Companyâs 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.
Further, your Company has obtained money policy to cover âmoney in safe and till counter and money in transitâ for the Companyâs 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.
Your Company acts as a group administrator and is also registered with Insurance and Regulatory Development Authority of India (IRDAI) as a Corporate Agent for distribution and solicitation of life insurance products of the joint venture entity DHFL Pramerica Life Insurance Company Limited.
During the previous financial year, your Company entered into a Memorandum of Understanding with Cholamandalam MS General Insurance Co. Ltd. (Chola MS) where the Company serves as group administrators and managers for group health and/or personnel accident insurance policy. During the financial year 2016-17, your Company also became a Corporate Agent for Chola MS 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. During the financial year under review, Company has obtained a Corporate Agent- Composite license bearing registration no. CA0052 from IRDAI.
NATIONAL HOUSING BANK GUIDELINES
The Company has complied with the provisions of the Housing Finance Companies (NHB) Directions as prescribed by National Housing Bank (NHB) and has been in compliance 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 compliance of the same.
RISK MANAGEMENT
As a housing finance company, your Company continues to stay exposed to various risks associated with lending business including credit risk, market risk, liquidity risk, legal risks, interest rate risk, compliance risk and operational risk. Your Company has a very strong risk management team and a very robust credit operations structure to mitigate these risks. This is aided by sound technology, robust processes and specialized workforce. Your Companyâs philosophy is to keep the risk management and underwriting functions separate from each other in order to keep the portfolio protected. These sustained efforts to strengthen the risk framework and portfolio quality have yielded significant results over the last few years.
Your Company places emphasis on risk management measures to ensure an appropriate balance between risk and return. Your Company has taken steps to implement robust and comprehensive policies and procedures to identify, measure, monitor and manage risks. Risk management is a Board driven function with the overall responsibility of risk management assigned to the Risk Management Committee of the Board of Directors. At the operational level, risk management is assigned to the Asset Liability Management Committee (âALCOâ). Sensitive financial risks are monitored by the Risk Management Committee and also by Audit Committee of the Board. Your Company conducts risk profiling on a regular basis for the purpose of self-assessment.
During the financial year under review, the Company has setup Risk Containment Unit (RCU) at all major business locations. This unit is manned with risk specialists who work very actively to minimize bad loans from getting into the system. They also do a lot of analysis on bad loans to further strengthen the policies and processes prevalent in the organization. The Board is also at regular intervals updated on the risk management systems and processes.
Your Company has put in place a Business Continuity Plan. The risk management policies of the Company are reviewed and revised on regular basis to identify and mitigate attendant risks in a proactive manner under the changing business environment.
ASSET LIABILITY MANAGEMENT COMMITTEE (ALCO)
The Asset Liability Management Committee (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. ALCO ensures that the liquidity and interest-rate risks are contained within the limits laid down by the Board. The Company has duly implemented the NHBâs Asset Liability Management Guidelines.
CODES AND POLICIES & COMPLIANCES
Your Company has formulated various Policies and Codes in compliance with provisions of Directions and Guidelines issued by the National Housing Bank (NHB), Companies Act, 2013, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and other applicable laws to ensure high ethical standards in the overall functioning of the organization. The said Policies and Codes are periodically reviewed by the Board of Directors.
The key Policies and Codes as approved by the Board of Directors and the respective compliance thereunder are detailed herein below:
Policy on Know Your Customer & Anti Money Laundering Measures
Your Company has a Board approved Policy on Know Your Customer (KYC) & Anti Money Laundering Measures (AML) in place and adheres to the said Policy. The said Policy is in line with the NHB Guidelines, as issued from time to time.
Your Company has adhered to the compliance requirements in terms of the said policy including the monitoring and reporting of cash and suspicious transactions. The Company furnishes to Financial Intelligence Unit, India (FIU), in the electronic mode, information of all cash transactions of the value of more than Rupees ten lakh or its equivalent in foreign currency and suspicious transactions whether or not made in cash, in terms of the said Policy. Your Company is registered with FIU vide registration No. FIHFC00010. Your Company is also following the process as briefed out under the Guidance Note on Effective Process of STRs Detection and Reporting for Housing Finance Sector, issued by Financial Intelligence Unit -India in consultation with the Regulator viz., the National Housing Bank (NHB). During the financial year under review, KYC & AML Policy was revised from time to time to align the same with the circulars issued by the National Housing Bank.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2017/05/ KYC-AML-Policy-3rd-May-2017.pdf
Fair Practice Code
Your Company has in place a Fair Practice Code (FPC), which includes guidelines on appropriate staff conduct when dealing with the customers and on the organizationâs policies vis-a-vis client protection. The FPC captures the spirit of the National Housing Bank guidelines on fair practices for Housing Finance Companies. Your Company and its employees duly comply with the provisions of FPC.
The said code is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2016/01/DHFL -Fair-Practice-Code.pdf
Policy on Disclosure of Material Events and Information
Your Company has in place Board approved Policy on Disclosure of Material Events and Information, formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 to determine the events and information which are material in nature and are required to be disclosed to the Stock Exchanges.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2015/12/ Policy-on-Disclosure-of-Material-Events-and-Information1. pdf.
Policy on Preservation of Documents and Records
Your Company has in place Board approved Policy on Preservation of Documents and Records formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Policy ensures that the Company complies with the applicable document retention laws, preservation of various statutory documents and also lays down minimum retention period for the documents and records in respect of which no retention period has been specified by any law/ rule/ regulation. The Policy also provides for the authority under which the disposal /destruction of documents and records after their minimum retention period can be carried out.
Code of Conduct for the Board of Directors and the Senior Management Personnel
Your Company has in place Code of Conduct for the Board of Directors and the Senior Management Personnel formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which sets forth the guiding principles on which the Company and its Board and Senior Management Personnel shall operate and conduct themselves with multitudinous stakeholders, government and regulatory agencies, media and anyone else with whom it is connected.
Pursuant to the notification issued by Securities and Exchange Board of India, during the financial year under review, your Company amended the Code of Conduct for its Board of Directors and the Senior Management Personnel.
A declaration by Chief Executive Officer, with regard to the compliance with the said code, forms part of this Annual Report.
The said code is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2017/01/ Code-of-Conduct-for-the-Board-and-the-Senior-Mgmt-Personnel.pdf
Code of Conduct for Prohibition of Insider Trading
Your Company has in place a Code of Conduct for Prohibition of Insider Trading formulated in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which lays down the process of trading in securities of the Company by the employees and the connected persons and to regulate, monitor and report trading by the employees and the connected persons of the Company either on his/her own behalf or on behalf of any other person, on the basis of unpublished price sensitive information.
Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information
Your Company has in place Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information formulated in accordance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, which lays down the practices and procedures for Fair Disclosure of Unpublished Price Sensitive Information that could impact price discovery in market for its securities.
The said code is available on the website of the Company at the URL:http://www.dhfl.com/wp-content/uploads/2015/12/ DHFL-Code-of-Practices-Procedures-for-Fair-Disclosure-of-UPSI.pdf
Code of Business Ethics (COBE)
Your Company has adopted a Code of Business Ethics (COBE) which lays down the principles and standards that govern the activities of the Company and its employees to ensure and promote ethical behaviour within the legal framework of the organization.
Whistle Blower Policy (Vigil Mechanism)
Pursuant to the provisions of Section 177 (9) & (10) of the Companies Act, 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 Companyâs 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.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2016/02/ Whistle-Blower-Policy-Revised.pdf
Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace
Your Company has in place a Policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace and an Internal Committee has been constituted thereunder. The primary objective of the said Policy is to protect the women employees from sexual harassment at the place of work and also provides for punishment in case of false and malicious representations.
Pursuant to the provisions of Section 22 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the complaints received thereunder and the details relating thereto are as follows:
(a) Number of complaints received in the year: 1
(b) Number of complaints disposed of during the year: 1
(c) Number of cases pending more than ninety days: Nil
(d) Number of workshops or awareness programme against sexual harassment carried out: During the financial year under review, there were various workshops and programmes conducted on spreading awareness with regard to Sexual Harassment at workplace, at various locations covering National Office, 6 zones, 32 regions and 226 locations.
(e) Nature of action taken by the employer or district officer: Pursuant to the enquiry initiated by the Internal Committee in respect of one complaint received during the financial year under review, basis the evidence/ proof including interrogation with complainant, office colleagues and defendant, no conclusive evidence of sexual harassment was found. The Internal Committee recommended that warning be issued to the defendant and the complainant be transferred to another department or location of the Company.
Comprehensive Risk Management Policy
Your Company is committed to manage its risk in a 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 revised to align the same with the changing business environment.
Nomination (including Boardsâ Diversity) Remuneration & Evaluation Policy (NRE Policy)
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 Companyâs 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 Board has thus adopted Nomination (including Boardsâ Diversity), Remuneration & Evaluation Policy, which, 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, alongwith 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. During the financial year under review, your Company has amended the NRE Policy to align the same with the regulatory requirements.
Additional details with respect to the said policy are given in the Report on Corporate Governance forming part of this Annual Report.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2017/06/ Nomination-Remuneration-Evaluation-Policy-Revised.pdf.
Policy on Fit and Proper Criteria for the Directors
During the financial year under review, your Company has formulated and adopted a Policy on Fit and Proper Criteria for the Directors, in accordance with Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016 which inter-alia, lays down the fit and proper criteria of the Directors at the time for their appointment/ reappointment and on a continuing basis.
Related Party Transaction Policy
Your Company has in place Related Party Transaction Policy as per the provisions of Companies Act, 2013 read with the rules made thereunder 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.
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 provisions of the Companies Act, 2013 and the rules thereunder.
Pursuant to Housing Finance Companies - Corporate Governance (National Housing Bank) Directions, 2016, the Related Party Transaction Policy of the Company forms part of this Boardâs report as âAnnexure - 4â.
The said policy is available on the website of the Company at URL http://www.dhfl.com/wp-content/uploads/2017/05/ Related-Party-Transaction-Policy.pdf
Corporate Social Responsibility (CSR) Policy
Your Company has in place Corporate Social Responsibility policy (CSR Policy), as 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. 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.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2015/11/ Revised-CSR-Policy.pdf
The Annual Report on CSR activities forms part of this Boardâs report as âAnnexure - 5â.
Dividend Distribution Policy
During the financial year under review, your Company has formulated and adopted Dividend Distribution Policy, 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 Companyâs 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 recommendation/ declaration of dividend to the Members of the Company.
The said policy is available on the website of the Company at the URL http://www.dhfl.com/wp-content/uploads/2017/05/ Dividend-Distribution-Policy.pdf and forms part of this Boardâs report as âAnnexure - 6â.
Policy for Determining Material Subsidiary
During the financial year under review, your Company has formulated and adopted the Policy for determining Material Subsidiary in accordance with Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which inter-alia, lays down the criteria for determining âmaterialâ subsidiary(ies) and for ensuring compliance with respect to their governance and disclosure requirements.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2016/06/ Policy-on-determining-of-material-subsidiary.pdf
Internal Guidelines on Corporate Governance
During the financial year under review, your Company has formulated and adopted the Internal Guidelines on Corporate Governance in accordance with Housing Finance Companies
- Corporate Governance (National Housing Bank) Directions, 2016, which inter-alia, defines the legal, contractual and social responsibilities of the Company towards its various stakeholders and lays down the Corporate Governance practices of the Company.
The said policy is available on the website of the Company at the URL: http://www.dhfl.com/wp-content/uploads/2017/05/ Internal-Guidelines-on-Corporate-Governance.pdf
Policy on Open Architecture for Retail Insurance Business
Your Company has in place a policy on Open Architecture for Retail Insurance Business in terms of the Insurance Regulatory and Development Authority of India (Registration of Corporate Agents) Regulations, 2015, which was amended during the financial year. It lays down the manner of soliciting and servicing insurance products and addresses the manner of adopting the philosophy of open architecture and its implementation.
Other Policies
Further in order to strengthen the internal procedures and systems and for better governance, your Company also has in place various other policies and manuals such as Conflict of Interest Policy, Information Security Policies, Investment Policy, Policy for private placement of Non-Convertible Debentures (NCDs), Model Code of Conduct for Distributors, brokers and intermediaries, Business Continuity Plan, Asset Liability Management Policy, NPA Management Policy, Comprehensive Outsourcing Policy and Staff Accountability Policy for ensuring the orderly and efficient conduct of Companyâs business.
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 2017-18 on time.
MARKETING AND BRANDING
Your Company through its focused branding and marketing effort has been continuously working towards fulfilling its Founder Chairmanâs 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). Your Company believes in handholding the consumer in his journey to fulfil his dream 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 âGhar Jaisa Loanâ was also created, which infers loan according to customerâs 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, by showing the importance of dreaming to buy a house of oneâs own (Sapna) and post that pushed the envelope further by voicing the excuses which people give for not buying a house of their own (Bahana). In its latest communication, your Company has emphasized that the right time to buy a home is now (Home loan kab?).
Your Company has also ensured value driven communication, to reinforce the 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 âSharmaji & Vinodjiâ launched in 2016 as a part of its consumer education initiative.
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 as recognition at various award forums:
- âIndustry Awardâ for the excellence in the Home Loan Banking.
- It has been recognised as the âDream Companies to work in Housing Finance Sectorâ organized by Times Ascent and World HRD Congress.
- DHFL Home Loan Dilse Campaign won the 11th Indyâs award for the most creative Ad on television in the BFSI sector.
- It has won the Marketing Campaign of the year for its âHomeLoanDilSeâ Campaign at the Global Marketing Excellence Awards endorsed by World Federation of Marketing Professional and CMO Asia.
- Your Company has won âGoldâ at the Asia Pacific Customer Engagement Forum & Awards for the Most Admired Customer Engaged Brand.
- Your Company has won âGoldâ at the Asia Pacific Customer Engagement Forum & Awards for Excellence in CSR.
- Your Company and Mr. Kapil Wadhawan (Chairman & Managing Director) were honored with the Indiaâs Greatest Brands and Leaders Award 2015-2016 organized by AsiaOne and URS Media.
- Awarded the Best Housing Finance Company in the Financial Services Sector by CMO Asia and Stars Group.
- âBahana Campaignâ has been awarded the Marketing Campaign of the year in the BFSI Sector presented and endorsed by CMO Asia.
- âBahana Campaignâ has been awarded âMarketing Campaign of the Yearâ in the BFSI Sector at the National Awards for Marketing Excellence endorsed by World CSR day, Stars Group and CMO Asia.
- âWealth2Health Fixed Depositâ product awarded the âBrand Extension Awardâ in the BFSI Sector at the National Awards for Marketing Excellence endorsed by World CSR day, Stars Group and CMO Asia
- Your Company has won âGoldâ at the Asia Pacific Customer Engagement Forum & Awards for its Bahana Campaign.
- Your Company has won the Golden Peacock Innovative Product and Service Award 2016 for its innovative âWealth2Health Fixed Depositâ product.
DISTRIBUTION NETWORK
The distribution network of your Company is designed to reach out to the 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 348 locations throughout India which includes 181 branches, 146 service centers, 18 circle/cluster offices, 2 disbursement hubs, 1 collection center as at March 31, 2017. Additionally, your Company has international representative offices located in London and Dubai.
Your Companyâs network is grouped into circles and clusters located pan-India and is spread over 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 banksâ 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
Pursuant to the approval of the Members of the Company at the 32nd Annual General Meeting held on July 20, 2016, Dr. Rajiv Kumar (DIN: 02385076) was appointed as an Independent Director of the Company for a period of five years , effective from August 7, 2015.
Pursuant to the approval of the Members of the Company at the 31st Annual General Meeting held on July 23, 2015, Mr. Kapil Wadhawan (DIN: 00028528), was re-appointed as the Managing Director (designated as Chairman & Managing Director) of the Company and as Key Managerial Personnel for a further period of five years w.e.f. October 4, 2015, and his office was made liable to retire by rotation, pursuant to the provisions of the Companies Act, 2013 and rules made thereunder. In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association, Mr. Kapil Wadhawan, Chairman & Managing Director being the longest in office among directors who are liable to retire by rotation, retires by rotation and being eligible; offers himself for reappointment 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 Third (33rd) 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 Directors of the Company.
PERFORMANCE EVALUATION
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. During the financial year under review, the Nomination and Remuneration Committee of the Board of Directors in light of the Guidance Note on Board Evaluation issued by Securities and Exchange Board of India reviewed and revised the performance assessment/ evaluation criterias. 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, Non-Executive Director and the Board as a whole. The Nomination and Remuneration Committee carried out the evaluation of every Directorâs 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.
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. Incase of urgent matters, additional Board meetings are held in between the quarterly meetings.
During the financial year 2016-17, seven (7) 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 Companies Act, 2013 and provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Board of Directors have constituted five other committees namely - Nomination and Remuneration Committee, Stakeholdersâ 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.
The Board of Directors had constituted two committees with specific objectives, namely - Sub-Committee for Investment in Mutual Fund Sector (which was dissolved by the Board on May 4, 2016) and Allotment Committee (comprising of Independent Directors) for allotment of warrants convertible into equivalent number of equity shares of Rs.10/- each, to the promoter group entity (which was dissolved by the Board on October 17, 2016)
The details of the composition of the Audit Committee alongwith that of other 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.
RELATED PARTY TRANSACTIONS
The Company in terms of the applicable provisions of Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 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.
During the financial year under review, the Company entered into one material related party transaction, the detailed disclosure of the same has been provided in Form AOC -2 as per the requirements of the Companies Act, 2013 and rules made thereunder which forms part of this Boardâs report as âAnnexure -7â.
All other related party transactions entered into by the Company in the ordinary course of business at armâs 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, 2017.
There were however, no materially significant related party transaction(s) entered by the Company with any of its Independent directors or senior management personnel or their relatives that may have potential conflict with the interest of the Company at large.
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 an Internal Audit Department, which conducts comprehensive audit 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 Companyâs internal control environment and monitors the implementation of audit recommendations.
The audit function maintains its independence and objectivity while carrying out assignments. For ensuring independence of audits, the Internal Auditor reports directly to the Audit Committee of Board of Directors. The function also proactively recommends improvement in policies and processes and suggests streamlining of controls against various risks.
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 Companyâs 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 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017, forms part of this Boardâs report as âAnnexure-8â. The said report does not contain any qualification, reservation or adverse remark.
STATUTORY AUDITORS
M/s. Chaturvedi & Shah, Chartered Accountants (Firm Registration Number 101720W) were appointed as the Statutory Auditors by the Members of the Company at the Thirty Second (32nd) Annual General Meeting held on July 20, 2016, to hold office from the conclusion of the 32nd Annual General Meeting until the conclusion of the 37th Annual General Meeting of the Company (subject to ratification of the appointment by the Members at every subsequent Annual General Meeting), in accordance with the provisions of the Companies Act, 2013.
Based on the recommendation of the Audit Committee, the Board of Directors, at their meeting held on May 3, 2017, recommended the ratification of appointment of M/s. Chaturvedi & Shah, Chartered Accountants as the Statutory Auditors of the Company and that the necessary resolution in this respect is being included in the notice of the Thirty Third (33rd) Annual General Meeting for the approval of the Members of the Company. M/s. Chaturvedi & Shah has furnished written consent and a confirmation to the effect that they are not disqualified to be appointed as the Statutory Auditors of the Company in terms of the provisions of Companies Act, 2013 and rules framed thereunder.
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 2016-17 does not contain any qualification, reservation or adverse remark.
DIRECTORSâ RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited (standalone) financial statements for the financial year ended March 31, 2017 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 Companyâs 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, 2017, 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, 2017 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 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 âManagement Discussion and Analysisâ 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 âReport on Corporate Governanceâ forms part of this Annual Report which also includes certain disclosures that are required, as per 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 Boardâs report as âAnnexure-9â. The said certificate for the financial year 2016-17 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 âBusiness Responsibility Report (BRR)â forms part of this Annual Report which describes the Companyâs performance and activities from environmental, social and governance perspective. The BRR is also available on the website of the Company at URL: http://www.dhfl.com/wp-content/uploads/2017/06/Business-Responsibility-Report-FY-2016-17.pdf.
EXTRACT OF ANNUAL RETURN
Pursuant to Section 134(3)(a) and Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return as at March 31, 2017, in the prescribed form MGT 9, forms part of this Boardâs report as âAnnexure -10â.
FUTURE OUTLOOK
The affordable housing finance industry is at a very exciting stage. The Governmentâs policies and path-breaking initiatives on affordable housing and finance, has opened up significant growth opportunities for your Company. The environment is greatly supportive of growth for your Company to expand towards broad basing financial inclusion across the country. The positive industry outlook, coupled with favorable macroeconomic indicators continue to set your Company on a high growth trajectory. In an era of accelerated growth, your Company believes that its rich heritage, a well-defined vision and unmatched experience in catering to the Lower and Middle Income [LMI] segment will continue to sharpen its competitive advantages. Your Company has embarked upon several new strategic initiatives across marketing, IT which has already started to greater speed of response, higher efficiency and stronger market position. Your Company remains steadfast to maintain its leadership position amongst peers and continue to be regarded as âthe most trusted partner of customers in the LMI and Economically Weaker Section segments, committed to transforming dreams of home ownership into a reality. Your Company looks forward with great excitement to another year of industry-leading growth in financial year 2017-18.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their gratitude to 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), the Companyâs Customers, Bankers and other Lenders, Members, Debenture holders, Trustees, Depositors and others for their continued support and faith reposed in the Company. The Board also places on record its deep appreciation for the dedication and commitment of the employees at all levels as their hard work, co-operation and support had enabled the Company 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
Dated: May 3, 2017
Mar 31, 2015
Dear Members,
The Board of Directors of your Company take pleasure in presenting the
Thirty First Annual Report along with the Audited financial statements
for the financial year ended March 31,2015.
FINANCIAL RESULTS
The Financial Performance of the Company for the financial year ended
March 31,2015, is summarised below: -
(Rs. in crore)
Standalone
2014-15 2013-14
Gross Income 5,981.64 4,967.68
Less : Interest 4,459.59 3,782.58
Overheads 553.49 439.08
Depreciation 25.52 10.91
Profit Before Tax 943.04 735.11
Less : Provision for taxation 321.75 206.11
Profit After tax 621.29 529.00
Add : Balance b/d from the previous year 411.08 362.28
Surplus available for appropriations 1,032.37 891.28
Appropriations
Transferred to Statutory Reserve under 160.00 160.00
Section 36(1)(viii) of the Income Tax
Act, 1961 read with Sec 29 C of
NHB Act, 1987
Transferred to General Reserve 200.00 200.00
Dividend for Earlier Year 0.09 0.03
Interim Dividend 51.46 38.50
Proposed Equity Dividend 29.14 25.69
Proposed 30th Anniversary Special
Equity Dividend - 38.53
Tax on Dividends 16.12 17.45
Balance carried over to Balance Sheet 575.56 411.08
Total 1,032.37 891.28
Appropriations from Net Profit are as detailed in the table given
above.
Transfer to Reserves
During the year under review, your Company transferred Rs. 200.00 crore
to the General Reserve and Rs.160.00 crore to the Statutory Reserve under
Section 36(1 )(viii) of the Income Tax Act, 1961 read with Sec 29 C of
NHB Act, 1987 out of the amount available for appropriation and an
amount of Rs. 575.56 crore is proposed to be retained in the profit and
loss account.
Deferred Tax Liability on the Special Reserve created during the
current year has been appropriated from Profit & Loss Account amounting
to Rs. 47.26 crore, in accordance with the National Housing Bank (NHB)
Guidelines. 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 Reserves under
Section 36(1)(viii) of the Income Tax Act, 1961) in respect of the
balance in special reserve as at April 1,2014 may be adjusted from the
opening free reserves of the Company over a period of three years in
the ratio of 25:25:50 respectively.
Your Company has proportionately adjusted its opening reserves as at
April 1, 2014 with an amount of Rs. 41.62 crore being contingent deferred
tax liability. The balance amount of Rs. 124.89 crore will be adjusted
over the next two years against the free reserves of the Company as per
the said ratio.
PERFORMANCE
Your Company has continued to live the vision of providing access to
easy home and is proud to be one of the leading players in affordable
home loan segment in the housing finance industry in the country.
Through the Company''s focus on lower and middle income (LMI) segment,
your Company has evolved its loan sourcing expertise, over a period of
past 30 years to better identify the needs of customers in the LMI
segment and estimate their income and repayment capabilities. Your
Company has developed a suite of products that caters to different
segments in various geographical territories of India. During the year
under review, your Company created separate business verticals for
housing and non-housing loans, in order to allow each vertical to focus
on its core business and use its expertise in underwriting loans. The
Company also identified Small and Medium Enterprises (SME) financing as
an additional keyline of business for its growth and launched it by
offering products such as medical equipment loans, plant & machinery
loans and property term loans for the SME clients. The SME business has
created a loan book of Rs. 365.52 crore as at the end of the financial
year 2015.
Backed by robust processes and consistent performance over the years,
your Company was also able to secure "CARE AAA" credit rating from
Credit Analysis and Research Ltd. ("CARE") and a credit rating of
"BWR AAA" (Stable) from Brickwork Ratings India Pvt. Ltd.
("Brickwork"), for its long term debts. These ratings indicate the
highest or very strong degree of safety regarding timely servicing of
financial obligations. This will help your Company to access funding at
competitive rate of interest, which will bring down overall funding
cost, gradually. The Company''s focused marketing efforts; improved
service quality and expanded distribution network have enabled its
brand to expand its reach to a much larger customer base.
During the year under review, your Company maintained its good
performance, in all major businesses and on all operational parameters.
Your Company earned Profit Before Tax of Rs. 943.04 crore for the
financial year ended March 31, 2015 as against Rs. 735.11 crore in the
previous financial year and the Profit After Tax of Rs. 621.29 crore as
against Rs. 529.00 crore in the previous financial year. The total
Income for the year under consideration was Rs. 5,981.64 crore and total
expenditure was Rs. 5,038.60 crore. The Asset under Management (AUM) of
your Company stood at Rs. 56,884.41 crore as at March 31, 2015 as against
Rs. 44,676.48 crore in the previous financial year.
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 31,2015 and the date of the
Directors'' report i.e. April 29, 2015.
DIVIDEND
Your Directors in their meeting held on October 21, 2014 had declared
an interim dividend for the financial year 2014-15 of Rs. 4/- (Rupees
Four Only) per equity share, on the 12,86,50,594 fully paid up equity
shares of Rs. 10/- each of the Company. Your Directors have further
recommended a final dividend to be paid out of current year profits of
Rs. 2/- (Rupees Two Only) per equity share to the equity shareholders.
Thus, the total dividend for the financial year 2014-15 aggregates to Rs.
6/- (Rupees Six Only) per equity share.
The final dividend payable shall be subject to the approval of the
Members at the ensuing Annual General Meeting. The total outgo on
account of dividend (including dividend distribution tax) will be Rs.
96.82 crore as against Rs. 120.20 crore in the previous financial year
(which included a Special 30th Anniversary celebration dividend of Rs.
3/- (Rupees Three Only) per equity share).
In terms of the Listing Agreement, your Company has also paid dividend
aggregating to Rs. 0.09 crore towards Final Dividend for the year 2013-14
to the new members who were allotted shares prior to the book closure
date for the dividend payment but after the date of Balance Sheet.
Similarly, equity shares that may be allotted under Employee Stock
Option Schemes or otherwise before the current date of the book closure
for payment of dividend shall rank pari passu with the existing shares
and shall be entitled to dividend for the financial year 2014-15.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION & PROTECTION FUND (IEPF)
Pursuant to the provisions of Section 205A (5) and Section 205C of
Companies Act, 1956, (which are still applicable, as the relevant
Sections under the Companies Act, 2013 are yet to be notified) the
amounts pertaining to dividends/ deposits, etc. that remained unclaimed
and unpaid for a period of seven years from the date it became first
due for payment, have been transferred from time to time, to respective
Investor Education and Protection Fund (IEPF) on the due dates, by the
Company and no claims in this respect shall lie against the Company.
The Company has been intimating the members/ depositors to lodge their
claim for payments due, if any, from time to time and such information
is also being mentioned in the Annual Report every year. Such claims,
as and when received have been settled. Despite constant and sincere
efforts to pay the unclaimed dividend / deposits and interest thereon
to such members / depositors, certain amount still remains unclaimed.
Unpaid /Unclaimed Dividend
During the financial year 2014-15, your Company has transferred
unclaimed final dividend of Rs. 0.09 crore pertaining to the financial
year ended 2006-07 and Rs. 0.05 crore unclaimed interim dividend for the
financial year ended 2007-08, to the Investor Education and Protection
Fund established by the Central Government.
Unclaimed Deposit
During the financial year 2014-15, an amount of Rs. 0.21 crore was
transferred to Investor Education and Protection Fund (IEPF) 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.
Pursuant to the provisions of Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying
with Companies) Rules, 2012, your Company has uploaded the details of
unpaid and unclaimed dividend / fixed deposit amounts (including
interest thereon) lying with the Company as at July 24, 2014 (i.e. the
date of 30th Annual General Meeting) on the Company''s website and has
also filed the same with the Ministry of Corporate Affairs. Members /
Depositors who have not yet claimed the previous year(s) dividend /
fixed deposit amount may write to the Company or to the Registrar and
Share Transfer Agent.
AMENDMENT IN MEMORANDUM & ARTICLES OF ASSOCIATION
During the year under review, pursuant to a special resolution passed
on January 14, 2015, by means of postal ballot, the Members of the
Company had approved an insertion of a new main object clause in the
Memorandum of Association of the Company so as to enable the Company
to, inter-alia, act as the co-sponsor and distributor of mutual fund
business.
Pursuant to a special resolution passed on January 14, 2015, by means
of postal ballot, the Members of the Company had also approved the
adoption of new set of Articles of Association (AOA) of the Company
(replacing the existing set of Articles of Association), in conformity
with the provisions of the Companies Act, 2013.
LENDING OPERATIONS
The Sanctions and Disbursements of housing / other loans, during the
year ended March 31, 2015, were Rs. 28,497.08 crore and Rs. 19,821.54 crore
respectively, as against Rs. 22,377.61 crore and Rs. 16,647.45 crore,
respectively, in the previous financial year. The cumulative loan
disbursement of the Company since inception was Rs. 78,631.72 crore.
Sale/ Assignment of Loans
During the year, the Company has sold/ assigned a pool of housing loans
aggregating to Rs. 1,937.03 crore and other non housing loans aggregating
to Rs. 97.24 crore. The Company will, however, continue to collect the
interest and EMI payments on these loans on behalf of the acquirer of
the loans and remit the same after retaining its portion in terms of
the individual agreements.
During the year, your Company has also securitised housing loan
contracts amounting to Rs. 527.90 crore through the Special Purpose
Vehicle (SPV) route. The Senior Series A1 Pass Through Certificate
(PTCs) issued by such SPVs amounts to Rs. 512.07 crore and carry the
highest rating of AAA (SO) by the external Credit Rating Agencies
involved in the process.
Simultaneously, your Company has subscribed to an amount of Rs. 15.83
crore in Subordinate Pass Through Certificates (PTCs) issued by the
aforementioned SPVs. These subordinate series A2 PTCs are rated AA
(SO) by the same external credit rating agencies and are required to be
invested in, in compliance with the Minimum Retention Requirement (MRR)
prescribed by RBI in its Guidelines on Securitisation issued in 2012.
Loan Book
As at March 31, 2015, the loan book stood at Rs. 51,039.65 crore as
against Rs. 40,451.04 crore in the previous year.
SHARE CAPITAL
(A) Authorised Share Capital
The Authorised Share Capital of the Company stands at Rs. 828,00,00,000
(divided into 74,80,00,000 Equity shares of Rs. 10/- each, 7,50,00,000
Redeemable Non Convertible Preference Shares of Rs. 10/- each and
5,00,000 Redeemable Non Convertible Preference Shares of Rs. 100/- each).
During the year, there has been no change in the Authorised Share
Capital of the Company.
(B) Paid-up Share Capital
(1) Equity
During the year under review, pursuant to a special resolution passed
by the Members of the Company by means of postal ballot on February 23,
2015, your Company issued and allotted 1,69,31,102 (One Crore, Sixty
Nine Lakh, Thirty One Thousand, One Hundred and Two ) Equity Shares of
face value Rs. 10 each to Qualified Institutional Buyers (QIB) at a price
of Rs. 478.18 per Equity Share (including share premium of Rs. 468.18 per
Equity Share) aggregating to Rs. 809,61,14,354 (Rupees Eight Hundred Nine
Crore, Sixty One Lakh, Fourteen Thousand, Three Hundred and Fifty Four
only) in terms of Chapter VIII of the Securities and Exchange Board of
India (Issue of Capital and Disclosure Requirements) Regulations, 2009
("SEBI ICDR Regulations"), as amended.
During the year, your Company allotted in tranches 3,25,400 equity
shares of Rs. 10/- each, upon exercise of stock options to the eligible
employees of the Company under the Employee Stock Option Schemes - 2008
and 2009.
Post allotment of shares by way of Qualified Institutional Placement
and exercise of Employee Stock Options, the paid up equity share
capital of your Company has increased to Rs. 145,67,67,420 divided into
14,56,76,742 equity shares of face value of Rs. 10/- each, as at March
31,2015.
(2) Preference Share Capital
During the year under review, the Company has not issued preference
share capital.
Your Company has neither issued any shares with differential voting
rights nor any Sweat Equity shares, during the year under review.
RESOURCE MOBILISATION
The Company''s borrowing policy is under the control of the Board. The
Company has vide special resolution passed by means of postal ballot on
June 12, 2014, under Section 180(1)(c) of Companies Act, 2013,
authorised the Board of Directors to borrow money upon such terms and
conditions as the Board may think fit in excess of aggregate of paid up
share capital and free reserves of the Company upto an amount of Rs.
1,00,000 crore and the total amount so borrowed shall be within the
limits as prescribed under the Housing Finance Companies (NHB)
Directions, 2010.
Your Company continued to use a variety of funding sources to optimise
funding costs, protect interest margins and maintain a diverse funding
portfolio which further strengthened its funding stability and
liquidity needs. Your Company continued to keep tight control over the
cost of borrowings through negotiations with lenders and thus, raised
resources at competitive rates from its lenders while ensuring proper
asset liability match. The weighted average borrowing cost as at March
31,2015 was 10.28% as against 10.59% in the previous year. As at March
31, 2015, your Company''s sources of funding were primarily from banks
and financial institutions (58.31%), non-convertible debentures
(18.02%), public (fixed) deposits (7.62%), refinancing from NHB
(2.95%), commercial papers (7.19%), subordinated debt (2.44%),
multilateral agencies (3.09%) and perpetual debt (0.38%).
During the year under review, your Company diversified its resources
profile by accessing funds from multilateral agencies such as the
International Finance Corporation (IFC), Asian Development Bank (ADB)
and Deutsche Investitions Und Entwicklungsgesellschaft MBH (DEG,
Germany). Your Company continues to gradually reduce its reliance on
the borrowings from banks and financial institutions and focus on
capital market instruments with lower funding costs.
Your Company''s total borrowings amounted to Rs. 48,920.74 crore as at
March 31, 2015, as against Rs. 39,486.89 crore a year earlier. The
Company''s Asset-Liability 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. Your Company continued to raise longer tenor
borrowings in financial year 2014-15 as well. Another strategy adopted
to keep a balanced ALM 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.
Loans from Banks
As part of its liability management, your Company endeavours to
diversify its resource base in order to achieve an appropriate maturity
structure and minimise the weighted average cost of borrowed funds.
Your Company continued to leverage on its long term relationship with
banks and thus tied up fund based working capital limit to Rs. 824 crore
as at the end of financial year. Your Company also raised additional
term loans from banks to the extent of Rs. 5,375 crore during the year at
competitive rates available in the market and continued its focus on
domestic sources.
Refinance from National Housing Bank (NHB)
The outstanding balance of refinance loan from NHB as on March 31,2015
amounts to Rs. 1,441.13 crore.
Subordinated Debts
Your Company did not raise money through subordinate debt during the
year. As at March 31, 2015, your Company''s outstanding subordinated
debts were Rs. 1,191.50 crore. The debt is subordinated to present and
future senior indebtedness of your Company. Based on the balance term
to maturity, as at March 31, 2015, Rs. 959.42 crore being the discounted
book value of subordinated debt is considered as Tier II under the
guidelines issued by the National Housing Bank (NHB) for the purpose of
capital adequacy computation. The subordinated debt have been assigned
"CARE AA " credit rating from Credit Analysis and Research Ltd
("CARE") and a credit rating of "BWR AAA" (Stable) from Brickwork
Ratings India Pvt. Ltd ("Brickwork").
Non-Convertible Debentures (NCDs)
Your Company continues to issue fully Secured Redeemable
Non-Convertible Debentures on private placement basis. During the year
under review, your Company has issued Secured Redeemable
Non-Convertible Debentures (the "Debentures") amounting to Rs. 4,163.20
crore to banks and financial institutions by way of issue of NCDs and
Zero Coupon NCDs (ZCDs). The outstanding balance of Debentures
including accrued premium on ZCDs as on March 31, 2015 amounts to Rs.
8,817.36 crore. The proceeds of the aforesaid issue were utilised for
making disbursement to meet the housing finance requirements of the
borrowers of the Company, as well as for general corporate purposes
Debenture Trust Agreement(s) in favour of GDA Trusteeship Limited and
IDBI Trusteeship Services Limited for the aforesaid issues were
executed.
Your Company has duly paid the interest due on the aforesaid Debentures
on time. The Company''s NCDs have been assigned the rating of "CARE
AAA" by CARE and "BWR AAA" by Brickwork.
Your Company being Housing Finance Company (HFC) is exempted from the
requirement of creating Debenture Redemption Reserve (DRR) in case of
privately placed debentures. Since the Debenture issues of the Company
till date are through private placement, no DRR has been created.
Disclosure under Housing Finance Companies issuance of Non-Convertible
Debentures on Private Placement Basis (NHB) Directions, 2014
During the year under review, the Non-Convertible Debentures 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 .
Perpetual Debt Instrument
During the year under review, your Company did not issue any Innovative
Perpetual Debt Instruments ("IPDI"). The outstanding as at March 31,
2015, amounts to Rs. 185.70 crore.
Commercial Paper
The Commercial Paper (CP) program of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the rating of CRISIL A1 (A One Plus). As at March 31,2015,
Commercial Papers outstanding amount stood at Rs. 3,515 crore.
External Commercial Borrowings (ECB)
During the year under review, your Company availed external commercial
borrowings of up to US$ 125 million (Rs. 784.25 crore) from Asian
Development Bank (ADB) Philippines, for a period of seven years for
onward lending in the low cost affordable housing segment in India; 40%
of the said proceeds have to be utilised for financing prospective
owners of low cost affordable housing units in certain under- developed
Indian states such as Uttar Pradesh, Madhya Pradesh, Rajasthan,
Jharkhand, Chhattisgarh, Uttarakhand, Andhra Pradesh and West Bengal.
Further, your Company also availed external commercial borrowings of
US$ 50 million (Rs. 311.34 crore) from Deutsche Investitions Und
Entwicklungsgesellschaft MBH (DEG, Germany, Part of KFW Group), for a
period of 8 years to finance prospective owners of individual units in
the low cost affordable housing projects in India.
In Financial year 2014, your Company had availed external commercial
borrowings of up to US$70 million (Rs. 418.25 crore) from International
Finance Corporation (IFC), Washington, for a period of 8 years for
onward lending in the segment of low cost affordable housing projects.
In terms of ECB Master Circular guidelines issued by RBI, the proceeds
have to be 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.
During the financial year 2014-15, the principal amount for all the ECB
loans availed by your Company has been fully hedged and in financial
year 2013-14, the principal amount and LIBOR have been hedged, in
accordance with the guidelines prescribed by Reserve Bank of India.
Security Coverage for the 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 financial statements for the year ended March
31,2015.
Deposits
Your Company being a Deposit accepting Housing Finance Company,
registered with National Housing Bank, is governed by the provisions of
Housing Finance Companies (NHB) Directions, 2010, as amended.
Your Company sees retail deposits as a major source for funding and has
taken several initiatives during the year to make these deposits
available through the length and breadth of the country. This is
reflected in the robust growth seen in the fixed deposit portfolio of
the Company. The total deposits grew by 43.65% to Rs. 3,728.30 crore as
on March 31, 2015. The depositor accounts also grew by a robust 25%
growth to 2,05,902. This is a significant testimony of increasing
retail depositors confidence in your Company.
During the year under review, your Company launched a new deposit
product ''Wealth2Health Fixed Deposit'' which gives the customers all the
benefits of normal fixed deposits but also provides for liquidity in
case of any health emergency, along with a host of other related
benefits. Your Company has also centralised its fixed deposit
operations for better control and monitoring. This will help us to
service the customers in a much more effective and efficient manner.
Several customer centric projects were undertaken during the year aimed
at upgrading customer service levels, including automation of certain
processes which will result in reduced turnaround time and lower cost.
Fixed Deposits accepted by the Company are secured appropriately to the
extent of floating charge on approved securities and bank deposits
created by way of Deed of Trust, as per the guidelines issued by the
National Housing Bank. The security details in respect of the same are
mentioned at Note No. 5.4 in the Notes to accounts forming part of the
audited financial statements for the year ended March 31,2015.
As of March 31, 2015, 14,035 depositors aggregating to Rs. 39.98 crore
(along with interest due thereon) had not claimed the deposits.
Depositors have been intimated regarding the maturity of their
deposits, with a request to either renew or claim their matured
deposits.
Your Company has obtained due accidental death insurance cover for its
depositors. The sum assured per depositor is Rs. 1 Lakh. The cover
provides protection to the depositor''s family in case of untimely
accidental death of the depositor. This coverage is given irrespective
of the deposit amount.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013, apart from the
loans made, guarantee given or security provided by the Company in the
ordinary course of business are given in the Notes to accounts forming
part of the Audited Financial Statements for the year ended March
31,2015.
CREDIT RATING
The Company''s borrowings enjoy the following Credit Ratings:
Rating / Outlook
Nature of borrowing CARE Brickwork ICRA CRISIL
Short-term debt /
commercial paper - - - CRISIL A1
Public (fixed) deposits CARE AAA(FD) BWR FAAA (Stable) - -
Subordinated debt CARE AA BWR AAA (Stable) - -
NCDs CARE AAA BWR AAA (Stable) - -
IPDIs CARE AA BWR AA (Stable) - -
Long-term bank loans CARE AAA - - -
Structured obligations CARE AAA(SO) - ICRA AAA CRISIL AAA
(SO) (SO)
CAPITAL ADEQUACY
As required under National Housing Bank Directions, your Company is
presently required to maintain a minimum capital adequacy of 12% on a
stand-alone basis. The following table sets out Company''s capital
adequacy ratios as at March 31, 2013, 2014 and 2015.
As on March 31
2015 2014 2013
Capital Adequacy Ratio 16.56% 17.16% 16.52%
The capital adequacy ratio (CAR) of your Company was at 16.56% as on
March 31,2015, as compared to the regulatory requirement of 12%.
In addition, the National Housing Bank Directions 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 Non-Performing
Assets (NPAs), under Housing Finance Companies (NHB) Directions, 2010,
as amended from time to time. The Company did not recognise 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 National Housing Bank Directions. 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:
As of March 31, Rs. in crore except %
Particulars 2015 2014 2013
Gross Non-Performing 485.05 317.52 239.32
Assets
% of Gross NPA to Total 0.95% 0.78% 0.71%
Loan Portfolio
Net Non-Performing 345.95 209.87 155.96
Assets
% of Net NPA to Total 0.68% 0.52% 0.46%
Loan Portfolio
Total cumulative 430.15 331.35 262.67
provision - loans and other assets
Recovery & Collections
The Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act 2002 (SARFAESI) has proved to be a
useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
defaulters. The Company has acquired certain assets under SARFAESI
which are being auctioned as per the rules and regulations of SARFAESI
involving a loan outstanding of Rs. 80.93 crore.
In order to prevent frauds in loan cases involving multiple lending
from different banks / housing finance companies, the Government of
India has set up the Central Registry of Securitisation Asset
Reconstruction and Security Interest of India (CERSAI) under Section 20
of the SARFAESI Act 2002 to have a central database of all mortgages
created by lending institutions. Your Company is registered with CERSAI
and the data in respect thereto is being submitted, from time to time.
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. During the year, the Investment policy was reviewed
and revised by the Board of Directors. The decisions to buy and sell
upto 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 and short term deposits with banks. During
the year, your Company earned Rs. 74.16 crore by way of Income from
Mutual funds & Other Operations and Rs. 60.56 crore by way of interest on
deposits placed with banks and bonds. At the end of the financial year,
your Company maintained Rs. 736.46 crore by way of deposits 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 31,2015, your Company has invested Rs. 216.46 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 for Rs. 228.33 crore. It is
being maintained within the limits prescribed by National Housing Bank.
INVESTMENT IN ASSOCIATE COMPANIES Investment in DHFL Pramerica Life
Insurance Company Limited (DPLI)
During the financial year 2014-15, your Company made further investment
to the tune of Rs. 16.84 crore in the joint venture entity DPLI, by way
of subscription to 1,68,43,092 equity shares of Rs. 10/- each of DPLI.
However, the Company maintained its shareholding at 50% of equity share
capital in DPLI. The Company also acts as a corporate agent for
distribution of DPLI''s life insurance products as per Insurance
Regulatory Development Authority of India (IRDA) guidelines.
Investmentin Avanse Financial Services Ltd. (Avanse)
Your Company made further investment in its associate company, Avanse,
a Non Banking Finance Company registered with Reserve Bank of India, to
the tune of Rs. 19.64 crore, by way of subscription to 42,69,639 equity
shares of Rs. 10/- each at price of Rs. 46/- per share. However, the
percentage of shareholding of your Company stood at 48.39% of the total
paid-up share capital of Avanse.
As on date of this report, your Company does not have any subsidiary
company.
The Statement in the prescribed format AOC-1, pursuant to Section
129(3) of the Companies Act, 2013 read with the Companies (Accounts)
Rules, 2014, related to the associate companies and Joint Venture, is
annexed as "Annexure-1" to this Report.
Disinvestments Arthveda Fund Management Pvt. Ltd. (Arthveda)
During the year under review, your Company disinvested its entire
equity stake from Arthveda. The Company earned a profit of Rs. 1.18 crore
on sale of shares of Arthveda. The proceeds from these disinvestments
were ploughed back in the business activities of the Company.
Proposed investment in Asset Management Services
During the year under review, your Company entered into definitive
agreements to acquire a 50.00% equity stake in each of Pramerica Asset
Managers Private Limited (PAMPL) and Pramerica Trustees Private Limited
(PTPL) from PGLH of Delaware, Inc., which is a wholly-owned, indirect
subsidiary of Prudential Financial Inc. PAMPL develops, manages,
markets and operates as an asset management company for Mutual Fund
business. PTPL provides trusteeship services and ensures that the
activities of PAMPL are in compliance with the SEBI (Mutual Funds)
Regulations, 1996, as amended from time to time. The completion of this
acquisition is pending the satisfaction of a few of conditions,
including, among other things, receipt of approval from SEBI.
Through these entities, the Company aims to extend its strategy of
providing comprehensive financial solution of loan, protection and
thrift to households in different income and economic strata. Financial
inclusion will be integral to this strategy.
INFORMATION TECHNOLOGY
During the year under review, your Company has initiated a technology
transformation program (Tech2.0) in association with IBM to support
Company''s growth, improve operational efficiency and optimise costs
through the use of technology. This program is expected to establish a
scalable and flexible technology landscape, improve customer
centricity, enable faster decision making through automation and
analytics, thereby taking the technology platform to a new level. Your
Company aims to align its technology landscape to evolving business
needs, which would support the Company in its growth targets. Under
Tech2.0, your Company plans to replace its legacy systems and business
application platforms with proven commercial-off-the-shelf products,
which would provide best fit solutions to the business functions. Your
Company has further upgraded its existing information technology
infrastructure by increasing network bandwidth and bringing in new
servers for the core applications, thereby improving its performance.
HUMAN RESOURCES
Your Company''s human resources are the cornerstone of growth and
progress. The Company recognises that people are not just a valuable
asset but play a critical role in achieving its goals too. Your Company
has well experienced management team on whom the Company rely upon to
anticipate industry trends and to capitalise on emerging new business
opportunities. With a combination of Company''s reputation in the
market, working environment and competitive compensation programs, it
is able to attract and retain talented people.
The Company''s vision is to become an employer of choice by providing a
compelling value proposition to its employees. Your Company strives to
attract the best talent in the industry and continues to invest in
employees'' development, retention, leadership, motivation and training
The Company''s HR policies relating to hiring, deployment, transfers,
promotion, training, including its performance- linked bonuses and
employee stock options, have been designed with the clear aim of
building a ''cadre-based organisation'', whose cadre understands the
Company''s customers, their problems, issues and aspirations. The
Company''s human resources policies and practices are focused on
recruiting and training employees who can empathise and deal with
potential and existing borrowers.
Your Company implemented a robust reward and recognition framework
across all functions under which contributions to the business by the
employees are rewarded. The Company also introduced an online library
facility across India which is available to all employees.
Your Company also offers to its eligible employees the right to
participate in Company''s employee stock option schemes in order to
reward employees for their performance and motivate them to contribute
to the growth and profitability of the Company.
The workforce strength of your Company as on March 31,2015 was 2,375.
The total work force cost during the year was Rs. 196.33 crore as
compared to Rs. 176.42 crore in the previous year. The increase in cost
is mainly due to the increase in work force to meet the requirements of
business on account of significant expansion in terms of geography as
well as in business volumes and the salary revisions effected during
the year.
Learning & Development
Your Company''s Learning & Development Team whose core responsibility is
to provide learning solutions to every role within the organisation by
designing comprehensive training frameworks to match the dynamic and
ever evolving business trends.
Your Company created stronger depth and focus in its skill building
efforts. Your Company 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 2014-15, training was imparted to 1,712
employees, covering a wide range of functional areas including sales
skill development programs. Employee trained under Credit analytical
skills and appraisal techniques were 607. The total number of employees
who underwent operational excellence training programs was 621, whereas
Risk and fraud management was 455. "Aagman" the exclusive monthly
Induction program for the new recruits was conducted to give an overall
view of the company''s vision and mission. Similarly, program based on
soft skills and monitoring techniques were also conducted. In keeping
with its importance and in compliance to NHB norms trainings on KYC &
AML Policies were also imparted at all levels within the organisation.
External training programs and cross functional exposures were utilised
to provide an extra edge to employees for continuous and better
performance through learning and job experience.
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 analysing the
same with focus on measuring and improving employee engagement and
learning quotient. Taking concrete steps based on the study findings is
helping the organisation in building a stronger and more engaged
workforce.
Your Company''s Human Resources initiatives and L&D systems are designed
to ensure an active employee engagement process, leading to better
organisational capability and vitality for maintaining a competitive
edge and in pursuing its ambitious growth plans. Customer focus remains
at the core of all L&D initiatives .
EMPLOYEE REMUNERATION
(A) . The ratio of the remuneration of each director to the
median employee''s remuneration and other details in terms of
sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, are forming part of this report and is annexed
as "Annexure - 2" to this Report.
(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, forms part of this report. In
terms of Section 136 of the Companies Act, 2013 the same is open for
inspection at the Registered Office of the Company. Copies of this
statement may be obtained by the members by writing to the Company
Secretary.
EMPLOYEES STOCK OPTION SCHEME (ESOS)/ EMPLOYEE STOCK APPRECIATION
RIGHTS (ESARs) Employees Stock Option Scheme (ESOS)
The Company has with the approval of Nomination & Remuneration
Committee (previously known as Remuneration and Compensation Committee)
of the Board of Directors of the Company and pursuant to the special
resolution passed by the Members of the Company, at the Annual General
Meeting held on July 27, 2007, formulated three employee stock option
schemes, the Employee Stock Option Scheme - 2008 (ESOS 2008 - Plan I),
ESOS -2009 - Plan II and ESOS 2009 - Plan III- in accordance with the
provisions of Securities and Exchange Board of India (Employee Stock
Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.
Employee Stock Appreciation Rights (ESARs)
During the year under review, the Members of the Company vide a special
resolution passed through postal ballot on February 23, 2015, approved
the Dewan Housing Finance Corporation Limited - Employee Stock
Appreciation Rights Plan 2015 (DHFL ESAR 2015) in accordance with the
provisions of Securities and Exchange Board of India (Share Based
Employee Benefits) Regulations, 2014 and issuance of stock appreciation
rights ("ESARs") through DHFL ESAR 2015, exercisable into 51,46,023
fully paid up equity shares in the aggregate having face value of ''10/-
each, directly or through an Employee Welfare Trust.
During the year under review, your Company with the approval of
Nomination & Remuneration Committee granted 15,50,100 ESARs under DHFL
ESAR 2015 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 as per terms of the DHFL ESAR Plan
2015.
The Nomination & Remuneration Committee of the Board of Directors of
the Company, inter-alia, administers and monitors the Employee Stock
Option Schemes/ Employee Stock Appreciation Rights Plan of the Company,
in accordance with the SEBI Guidelines.
The Company has received a certificate from the Auditors of the Company
that the Stock Options Schemes/ Employee Stock Appreciation Rights Plan
have been implemented in accordance with the SEBI Guidelines 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 members.
The applicable disclosures as stipulated under the SEBI guidelines, as
applicable for financial year 2014-15, with regard to Employee Stock
Option Schemes/Employee Stock Appreciation Rights are annexed as
"Annexure - 3" to this Report.
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 utilisation and maximum possible saving
of energy. During the year, capital investment to the tune of Rs. 0.27
crore was made in the energy conservative equipments like LED (Light
Emitting Diode) lights instead of CFL (Compact Fluorescent Lamp) and
installation of Solar energy System at its various branches.
The Company on its lending side actively associates in all programmes
and schemes of the Government and NHB, in promoting energy efficient
homes.
B. Technology Absorption
Your Company actively pursues a culture oftechnology adoption,
leveraging on the advancements in technology to serve customers better,
manage process efficiently and economically and strengthen control
systems. The Company has maintained a technology friendly environment
for its employees to work in. In keeping with the current trends in the
areas of digital marketing and social media, the Company has
effectively used these avenues in positioning itself in the market
place and gain better Customer engagement.
The current technology transformation program has been initiated to
bring the Company''s technology platform to a new level. The program
aims to identify and implement best-fit solutions in such areas as
(i) collaboration and employee communication portal to provide for
internal communication, knowledge sharing and collaboration between
employees;
(ii) customer relationship management, in particular in marketing,
sales and customer service, to achieve higher customer satisfaction and
enhanced marketing and sales effectiveness; (iii) digital channels to
provide for effective interaction between the Company and its customers
and business partners/agents, which will include creation of a customer
portal and an agent portal; (iv) financial accounting ERP to establish
unified accounting, financial management and accounting MIS at the
Company; (v) imaging, workflow and DMS to facilitate the centralisation
of data capture and validation of the Company''s loan, project finance
and FD applications; (vi) loan origination and management;
(vii) collections management, project finance and property information
management systems;
(viii) business systems (enterprise) integration; and
(ix) business intelligence and advanced analytics to build a platform
and an operational data store to generate systematic, consistent and
near real-time MIS reports and dashboards.
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. 40 in the Notes forming part of the financial statements
for the year ended March 31,2015.
INSURANCE
Your Company has insured its various properties and facilities against
the risk of fire, theft 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. 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 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.
NATIONAL HOUSING BANK GUIDELINES
The Company has complied with the provisions of Housing Finance
Companies (NHB) Directions, 2010, as prescribed by NHB and has been in
compliance with the various Circulars, Notifications and Guidelines
issued by National Housing Bank (NHB) from time to time. The Circulars
and the Notifications issued by NHB are also placed before the Audit
Committee / Board of Directors at regular intervals to update the
Committee/ Board members on the compliance of the same.
RISK Management
As a Housing Finance Company, your Company is exposed to various risks
that are inherent in the lending business, with the major risks being
credit risk, market risk, liquidity risk, legal risks, interest rate
risk, compliance risk and operational risk. The Company has invested in
people, processes and technology to mitigate risks posed by internal
and external environment. It has in place a strong risk management team
and an effective credit operations structure. Its risk management
policies continue to segregate the functions of Risk and Credit to
focus on portfolio management. Sustained efforts to strengthen the
risk framework and portfolio quality have yielded significant results
over the last few years.
The Company places emphasis on risk management measures to ensure an
appropriate balance between risk and return. The Company has taken
steps to implement robust and comprehensive policies and procedures to
identify, measure, monitor and manage risks. Risk management is a
board-driven function with the overall responsibility of risk
management assigned to the Risk Management Committee of the Board of
Directors which was constituted during the year. At the operational
level, risk management is assigned to the Asset Liability Management
Committee ("ALCO") and Operational Risk Management Committee
("ORMC"). Sensitive financial risks are monitored by the Risk
Management Committee and also by Audit Committee of the Board. Your
Company conducts risk profiling on a regular basis for the purpose of
self-assessment.
The Company has envisaged the setting up of risk containment unit (RCU)
at all major business locations. The Board and the Audit Committee on
regular intervals are updated on the risk management systems, processes
and minimisation procedures of the Company.
Your Company has put in place a Business Continuity Plan and adopts the
practice of reviewing its risk management policies to be in step with
the changing environment so as to identify and mitigate its attendant
risks in a proactive manner on a continuous basis.
ASSET LIABILITY MANAGEMENT COMMITTEE (ALCO)
The Asset Liability Management Committee (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. ALCO ensures
that the liquidity and interest-rate risks are contained within the
limits laid down by the Board. The Company has duly implemented the
NHB''s Asset Liability Management Guidelines.
CODES, STANDARDS AND POLICIES AND COMPLIANCES THEREUNDER Know Your
Customer & Anti Money Laundering Measure Policy
Your Company has a Board approved Know Your Customer & Anti Money
Laundering Measure Policy (KYC & AML Policy) in place and adheres to
the said Policy. The said Policy is in line with the National Housing
Bank guidelines. During the year under review, KYC & AML Policy was
modified by the Board in line with the NHB amended guidelines.
The Company has also adhered to the compliance requirement in terms of
the said policy including the monitoring and reporting of cash and
suspicious transactions. The Company furnishes to Financial
Intelligence Unit (FIU), India, in the electronic medium, information
of all cash transactions of the value of more than Rupees ten lakh or
its equivalent in foreign currency and suspicious transactions whether
or not made in cash, in terms of the said Policy.
Fair Practice Code
Your Company has in place a Fair Practice Code (FPC), which includes
guidelines on appropriate staff conduct when dealing with the customers
and on the organisation''s policies vis-a-vis client protection. The FPC
captures the spirit of the National Housing Bank guidelines on fair
practices for Housing Finance Companies. Your Company and its employees
duly comply with the provisions of FPC.
Code of Conduct for the Board of Directors and the Senior Management
Personnel
Your Company has adopted a Code of Conduct for its Board of Directors
and the Senior Management Personnel. The Code requires the Directors
and employees of the Company to act honestly, ethically and with
integrity and in a professional and respectful manner. During the year
under review, the Code of Conduct was revised as per the revised Clause
49 of the Listing Agreement. A declaration by Chaiman & Managing
Director with regard to compliance with the said code, forms part of
this Annual Report.
Code for Prohibition of Insider Trading Practices
Your Company has in place a Code for Prevention of Insider Trading
Practices in accordance with the Model Code of Conduct, as prescribed
under Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992, as amended and has duly complied with the
provisions of the said code.
The Board of Directors at its meeting held on April 29, 2015 adopted
(i) DHFL Code of Practices and Procedures for Fair Disclosure of
Unpublished Price Sensitive Information and (ii) DHFL Code of Conduct
for Prohibition of Insider Trading, as per Securities and Exchange
Board of India (Prohibition of Insider Trading) Regulations, 2015,
which shall become effective from May 15, 2015. The details of the same
are provided in Corporate Governance Report forming part of this Annual
Report.
Code of Business Ethics (COBE)
Your Company has adopted a Code of Business Ethics (COBE) which lays
down the principles and standards that govern the activities of the
Company and its employees to ensure and promote ethical behaviour
within the legal framework of the organisation.
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 Clause 49 of the Listing Agreement, the Company
has adopted a Whistle Blower Policy, which provides for a vigil
mechanism that encourages and supports its Directors and employees to
report instances of unethical behaviour, actual or suspected, fraud or
violation of the Company''s Code of Conduct or Ethics Policy. It also
provides for adequate safeguards against victimisation of persons who
use this mechanism and direct access to the Chairman of the Audit
Committee in exceptional cases. The details of the same are provided in
Corporate Governance Report forming part of this Annual Report.
Prevention, Prohibition &
Redressal of Sexual Harassment of Women at Workplace
The Company has in place a Policy on Prevention, Prohibition &
Redressal of Sexual Harassment of Women at Workplace and an Internal
Complaints Committee (ICC) has been constituted thereunder. The primary
objective of the said Policy is to protect the women employees from
sexual harassment at the place of work and also provides for punishment
in case of false and malicious representations.
During the financial year 2014-15, one compliant was received by the
ICC under the said policy and based on the recommendations of the ICC,
strict actions were taken against the employee found guilty.
Comprehensive Risk Management Policy
Your Company has formulated and adopted a Comprehensive Risk Management
Policy which covers a formalised 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 minimisation
procedures of the Company.
Nomination (including Boards'' Diversity) Remuneration & Evaluation
Policy (NRE Policy)
The Board has, on the recommendation of the Nomination & Remuneration
Committee framed a Nomination ( including Boards'' Diversity),
Remuneration & Evaluation Policy, which, inter-alia, lays down the
criteria for identifying the persons who are qualified to be appointed
as Directors and/or Senior Management Personnel of the Company,
alongwith 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 Section178 of Companies
Act, 2013 and Clause 49 of the Listing Agreement.
The details of the same are provided in Corporate Governance Report
forming part of this Annual Report.
Related Party Transaction Policy
Related Party Transaction Policy, as formulated by the Company, defines
the materiality of related party transactions and lays down the
procedures of dealing with Related Party Transactions. The details of
the same are provided in Corporate Governance Report forming part of
this Annual Report.
Corporate Social Responsibility (CSR) Policy
The Company has framed Corporate Social Responsibility (CSR Policy), as
per the provisions of the Companies (CSR Policy) Rules, 2015 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, the Company has constituted a Corporate Social
Responsibility Committee. The Corporate Social Responsibility Committee
assists the Board in fulfilling its duty towards the community and
society at large by assisting in 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 Corporate Governance Report forming
part of this Annual Report.
The Annual Report on CSR activities is annexed as "Annexure - 4" to
this Report.
Others Policies
Further in order to strengthen the Internal Procedures and Systems and
for better Governance, during the year under review, Board of Directors
of your Company had approved the following policies:
(a) Business Continuity Plan: The Company''s business continuity
management programme is headed by a nodal body-Business Continuity Plan
(BCP) Committee, comprising of Senior Management Personnel of the
Company. This framework enables to identify impact of any disruption on
the business/ operations of the Company and enables the company to
timely manage the related risk and ensure business continuity at all
times.
(b) Disclosure Policy: Disclosure Policy has been formulated, as per
the requirements of Clause 36 of Equity Listing Agreement and guidance
note issued in this respect by the Stock Exchanges. It, inter alia,
provides an illustrative list and the manner and authority under which
the material events that affect the business operations and performance
of the Company and are price sensitive, are required to be disclosed to
the Stock Exchanges.
Your Company also has in place various other policies and manuals such
as NPA Policy, Operations and Credit Manual, Agency Manual,
Comprehensive Outsourcing Policy, Policy on Appointment of Collection
Agency, Investment Policy and Staff Accountability Policy for ensuring
the orderly and efficient conduct of Company''s business.
LISTING OF SHARES OF THE COMPANY
The Equity Shares of your Company continue to remain listed on BSE Ltd.
and the National Stock Exchange of India Limited.
The Company has paid the listing fees as payable to the BSE Ltd. and
the National Stock Exchange of India Limited for the financial year
2015-16 on time.
Marketing and Branding
DHFL''s recognition as the leading housing finance company in India was
reinforced through a unified marketing and product strategy. A series
of brand awareness and customer engagement activities driven by
customer centric product innovations across the product portfolio, were
carried out during the year.
Your Company''s marketing function used a 360 degree approach to connect
with the consumer at every touch point; through various grass root
events, large industry forums & exhibitions and explicit online
presence. Consistent creative themes and content across channels
including digital, enhanced customer experience and generated greater
awareness for brand ''DHFL''.
Highlights of the year
Brand & Media: On November 21,2014, your Company on boarded Shah Rukh
Khan as its brand ambassador and the multi-media campaign''GharJaisa
Loan''was launched shortly afterwards across TV, Print, Cinema, Outdoors
& Digital Media. The campaign was also leveraged across all below the
line and branch collaterals to seamlessly communicate & reinforce the
trust & heritage of DHFL and establish a strong connect with Company''s
core target audience. The campaign resulted in enhancement of the
brand as both the Brand Awareness and Consideration scores of your
Company doubled as per the Brand Track research by Nielsen.
In October 2014, your Company took a strategic decision to offer Home
Loans at par with industry to further broad- base the customers. The
campaign was launched across markets in print & radio media.
DHFL ''Aao India Ghar Banayein'' Campaign in Q1 of FY2015 across TV,
Print & Radio reinforced DHFL''s 30 year service to the Indian consumer.
The Campaign was based on the Company''s Founding Vision of enabling
access to home ownership. The campaign also used Mumbai Indian Players
in this communication to reinforce the brand connect during the IPL
season.
DHFL ''Mumbai Indians'' IPL association was leveraged through a mix of
traditional and digital media along with newer engagement solutions.
Your Company''s logo continues to be prominently displayed on all team
T-shirts.
Enhancing DHFL''s Digital Footprint: Your Company engaged with two
million unique lives digitally and through various innovations in the
digital space. The website www.dhfl.com was redesigned and optimised
for both Mobile and Tablet devices and visitors on the Company''s
website increased by 23% over the previous year. Your company launched
the MYDHFL Facebook App to enhance customer experience and easy access
to DHFL and DHFL Facebook fans as on March 31, 2015 were at 1,69,067 -
a 190% increase over last year. On Twitter, there are 1887 people
following our handle - a 43% increase over last year & on YouTube where
the Company has its own channel, the video of our brand campaign - Ghar
Jaisa Loan generated 1.2 Mn likes.
Customer Engagement & Retail Promotion: Customer First Initiative has
been launched aimed at driving the customer centric approach amongst
employees and to encourage customer feedback. With regard to Customer
Centric Retail Activities there have been Standardised Activation &
Lead Generation activities across network locations. There have been
Branch/Offices Launches (105 through Project Freedom), Product Launches
(SME Loans & Wealth2Health Fixed Deposit) & Business Partner Meets for
generating awareness.
Public Relations: Continuous media engagement efforts resulted in your
company maintaining the highest visibility (single brand Share of
Voice) through Public Relations (PR) across television and print.
Customer Advocacy was further enhanced through authored articles and
live Q&A sessions on digital medium.
Call Centre Support: As a result of the integrated marketing efforts a
direct impact was seen in the business generated via DHFL Call Centre
and a 30% increase was observed in the business generated as against
the corresponding previous year.
Product Innovation & Support: With customer centricity at the core,
your Company launched new products and schemes and Competitive
benchmarking for all products & incentive schemes was carried out.
AWARDS AND RECOGNITIONS
During FY2014-15, your Company''s business excellence was also
recognised at various award forums:
The Brand Trust Report India Study 2015, ranked your Company as
India''s Most Trusted Housing Finance
Brand in a study covering 19,000 brands across 16 cities
Your Company ranked 271 amongst FE 500 India''s Finest Companies by
Market cap
Your company won my FM stars of the Industry award for Excellence in
Home Loan Banking (NBFC)
Mr. Kapil Wadhawan was featured amongst the Business Today''s India''s
top 100 CEOs
Your Company won The Most Promising Brand of the Year [NRI Home Loan
Services] in the Finance & Banking Sector (UAE)
Your Company was listed amongst Business World''s India''s 50 Biggest
Financial Companies and
Your Company received a Certificate of Appreciation from NHB for its
commitment and support in making the regulator''s Energy Efficient Homes
Program a success
BRANCH NETWORK
To support the Company''s growth initiatives, your Company has
established an integrated branch network that has helped it to optimise
operational coverage and improve Company''s ability to deliver products
and services to its customers effectively. Your Company has a presence
at 360 locations throughout India which includes 188 branches, 150
service centres, 19 circle/cluster offices, 2 disbursement hubs, 1
collection center as at March 31,2015. The Company''s network is
grouped into circles and clusters located pan-India. The Company''s
distribution network in India is primarily spread over Tier II and Tier
III cities and towns. Additionally, your Company has international
representative offices located in London and Dubai.
Your Company has also entered into tie-ups with a number of Indian
public and private sector banks to provide their customers access to
Company''s home loan solutions. The Company''s tie-ups with such banks
allow the Company to access the banks'' customers and branch networks
while providing them with the option to participate in Company''s loan
syndication programs. The Company''s partners include United Bank of
India for eastern India, Central Bank of India for central India, and
Dhanlaxmi Bank and Yes Bank Limited for pan-India. The alliance
arrangements benefit your Company financially, and the additional
points of sales through the ally banks'' networks provide the Company
with an increased footprint at minimal cost. The Company''s strong
network coverage is designed to provide increased penetration to cater
to the evolving needs of Company''s existing customer base and tapping a
growing potential customer base throughout India. In addition to the
Company''s network and resources, your Company engaged independent
direct selling associates ("DSAs''O and online sourcing platform
providers who work with the Company on a commission basis. The DSAs and
online sourcing platform share their own infrastructure and manpower on
which your Company leverages for sourcing business. Your Board believes
that such arrangements strengthen the Company''s geographical reach at
minimum additional cost. Business sourced by the DSAs and online
platforms is appraised by the Company in accordance with the Company''s
underwriting standards and requirements, upon which the company''s
employees undertake loan processing, appraisal and management of
customer relationships post disbursement of loans.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Your Directors express their profound grief on the sad demise of Mr. R.
P. Khosla, Independent Director of the Company, who passed away on July
5, 2014. Mr. R. P. Khosla was on the Board of the Company, as an
Independent Director, since March 17, 1993. He was the Chairman of the
Nomination & Remuneration Committee of the Board (erstwhile
Remuneration & Compensation Committee). The Board pays glowing tribute
to him and puts on record highest appreciation of his association with
the Company, as a highly respected Director.
During the period under review, the nomination of Mr. Kaikhushru Vicaji
Taraporevala (Nominee Director), was withdrawn by M/s. Caledonia
Investments Plc, (Caledonia) with effect from November 22, 2014, in
terms of their Shareholder''s Agreement with the Company. The Board
places on record its appreciation for invaluable services rendered by
Mr. Kaikhushru Vicaji Taraporevala.
Mr. Ajay Vazirani, Independent Director of the Company, resigned from
the Board, with effect from October 31, 2014, due to his pre-occupation
with other professional assignments. The Board of Directors places on
record their appreciation for the contribution made by Mr. Ajay
Vazirani during his long tenure on the Board of the Company, since
January 4, 2008.
On the basis of the recommendation of Nomination & Remuneration
Committee, the Board of Directors appointed Ms. Vijaya Sampath, with
effect from August 26, 2014, as an Additional Director, in the category
of Independent Director of the Company. Ms. Vijaya Sampath holds office
up to the date of the ensuing annual general meeting. The Company has
received a notice from a member under Section 160 of the Companies Act,
2013, along with a requisite deposit, proposing her candidature for the
office of Independent Director, to be appointed as such, at the ensuing
annual general meeting. Necessary resolution is being proposed in the
notice of the ensuing Annual General Meeting for appointment of Ms.
Vijaya Sampath as an Independent Director of the Company for the
approval of the Members pursuant to Section 149 of the Companies Act,
2013 for a term of 5 consecutive years w.e.f. August 26, 2014.
In accordance with the provisions of Section 152 of the Companies Act,
2013 and Articles of Association, Mr. Dheeraj Wadhawan, Non- Executive
Director of your Company retires by rotation and being eligible; offers
himself for re- appointment at the ensuing Annual General Meeting.
The term of Mr. Kapil Wadhawan as the Chairman & Managing Director
(designated as the ''Key Managerial Personnel), which was for a period
of 5 years w.e.f. October 4, 2010 is to expire on October 3, 2015. It
is proposed to re-appoint Mr. Kapil Wadhawan, as the Managing Director
( designated as Chairman & Managing Director ) of the Company and as
Key Managerial Personnel, pursuant to the provisions of Section 203 of
the Companies Act, 2013 and rules made thereunder, for a further period
of 5 years w.e.f. October 4, 2015. Necessary resolution is being
proposed in the Notice of the ensuing Annual General Meeting for the
approval of the members, for reappointment and remuneration of Mr.
Kapil Wadhawan, as Chairman & Managing Director for a period of 5 years
and his terms of appointment are also mentioned in the Explanatory
statement annexed to the Notice. In terms of the provisions of Section
152 of the Companies Act, 2013, it is proposed to make Mr. Kapil
Wadhawan, liable to retire by rotation.
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 Clause 49 of the Listing Agreement.
None of the Directors of the 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
resumes of Directors, proposed to be appointed/ re-appointed, nature of
their expertise in specific functional areas and names of other
companies in which they hold Directorship alongwith their
Membership/Chairmanship of Committees of the Board as stipulated under
Clause 49 of the Listing Agreement with Stock Exchanges, are provided
in the annexure to the Notice of the Thirty First 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
Directors of the Company.
During the year under review, the Board of Directors appointed Mr.
Harshil Mehta as the Chief Executive Officer, with effect from January
17, 2015, and designated him as the Key Managerial Personnel of the
Company, as per the provisions of Companies Act, 2013.
Mr. Santosh Sharma - Chief Financial Officer and Ms. Niti Arya -
Company Secretary who were employees even before the commencement of
Companies Act, 2013, were designated as Key Managerial Personnel, as
per the provisions of Companies Act, 2013.
PERFORMANCE EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
the Listing Agreement, an annual performance evaluation of the Board,
the directors individually as well as the evaluation of the working of
the Board Committees including Audit Committee, Nomination &
Remuneration Committee, Risk Management Committee, Stakeholders
Relationship Committee, Corporate Social Responsibility Committee and
Finance Committee of the Board of Directors of the Company, was carried
out during the year. The details of evaluation process as carried out
and the evaluation criteria have been explained in the Corporate
Governance Report, forming part of this Annual Report.
BOARD MEETINGS
The Company holds at least four Board meetings in a year, one in each
quarter, inter-alia, to review the financial results of the Company.
The Company also holds additional Board Meetings to address its
specific requirements, as and when required. All the decisions and
urgent matters approved by way of circular resolutions are placed and
noted at the subsequent Board meeting. Annual calendar of meetings of
the Board are finalised well before the beginning of the financial year
after seeking concurrence of all the Directors.
During the financial year 2014-15, six (6) Board Meetings were convened
and held. The intervening gap between the Meetings was within the
period prescribed under the Companies Act, 2013 and the Listing
Agreement. The details of the Board meetings held during the year along
with the attendance of the respective Directors thereat are set out in
the Corporate Governance Report forming part of this Annual Report.
Audit Committee & Other Board Committees
The Company has a duly constituted Audit Committee as per the
provisions of Section 177 of Companies Act, 2013 and Clause 49 of the
Listing Agreement with the stock exchanges.
The Board of Directors has constituted five 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 their
responsibilities.
The details of the composition of the Audit Committee alongwith that of
the other Board committees and their respective terms of reference are
included in the Corporate Governance Report 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.
The details of the Audit Committee and other Board Committees are also
set out in the Corporate Governance Report forming part of this Annual
Report.
RELATED PARTY TRANSACTIONS
There were no materially significant related party transactions i.e.
transactions of material nature, with its promoters, directors or
senior management or their relatives etc. that may have potential
conflict with the interest of company at large. Transactions entered
with related parties as defined under the Companies Act, 2013 and
Clause 49 of the Listing Agreement during the financial year 2014-15
were mainly in the ordinary course of business and on an arm''s length
basis.
Prior approval of the Audit Committee is obtained by the Company before
entering into any related party transaction as per the applicable
provisions of Companies Act, 2013 and Clause 49 of the Listing
Agreement. As per the provisions of Section 188 of the Companies Act
2013, approval of the Board of Directors is also obtained for entering
into Related Party Transactions by the Company. A quarterly update is
also given to the Audit Committee and the Board of Directors on the
related party transactions undertaken by the Company for their review
and consideration.
During the year, the Company has not entered into any material
contract, arrangement or transaction with related parties, as defined
under Clause 49 of the Listing Agreement and Related Party Transaction
Policy of the Company.
The policy on Related Party Transactions as approved by the Board is
uploaded on the Company''s website. None of the Directors have any
pecuniary relationships or transactions vis-a-vis the Company.
SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATOR OR COURT OR
TRIBUNALS
There were no significant/material orders passed by any Regulator or
Court or Tribunal which would impact the going concern status of the
Company and its future operations.
INTERNAL AUDIT & INTERNAL FINANCIAL CONTROL SYSTEMS
The Company has an Internal Audit Department, headed by a Senior
Management Personnel, who is a Chartered Accountant, designated as an
Internal Auditor under the provisions of Section 138 of the Companies
Act, 2013 who reports to the Audit Committee of the Board. The Internal
Audit Department conducts comprehensive audit 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 adequacy
and effectiveness of the Company''s internal control environment and
monitors the implementation of audit recommendations. The audit
function maintains its independence and objectivity while carrying out
assignments. It evaluates on a continuous basis, the adequacy and
effectiveness of internal control mechanism. The function also
proactively recommends improvement in policies and processes, suggests
streamlining of controls against various risks.
Your Company has laid down set of standards, processes and structure,
which enables it to implement internal financial control across the
Company and ensure that the same are adequate and operating
effectively.
Additionally, practicing Chartered Accountant firms were engaged to
conduct concurrent audit in branches covering more than 80% of the
business during the financial year. Concurrent audit assesses and
evaluates the operational effectiveness of checks and balances on a
continuous basis with focus on regulatory guidelines and adherence to
internal policies, procedures and guidelines issued by management from
time to time.
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 2014-15. The
Secretarial Audit Report for the financial year ended March 31, 2015,
is annexed as "Annexure - 5" to this report. The said report, does not
contain any qualification, reservation or adverse remark, however,
contains certain observations of the Secretarial Auditor which are self
explanatory, and thus do not call for any further comments.
AUDITORS
At the Thirtieth (30th) Annual General Meeting held on July, 2014, the
Members had appointed M/s. T. R. Chadha & Co., [Firm Registration No.
006711N] Chartered Accountants together with M/s Rajendra Neeti &
Associates, Chartered Accountants, (Firm Registration No.006543C), as
the Joint Statutory Auditors of the Company, by way of ordinary
resolution under section 139 of the Companies Act, 2013, to hold office
from the conclusion of Thirtieth (30th) Annual General Meeting until
the conclusion of the Thirty Fourth (34th) Annual General Meeting of
the Company, subject to ratification of the appointment by the members
of the Company at every Annual General Meeting as per the provisions of
the Companies Act, 2013.
Based on the recommendation of the Audit Committee, the Board of
Directors at their meeting held on April 29, 2015, recommended the
ratification of appointment of M/s. T. R. Chadha & Co., together with
M/s. Rajendra Neeti & Associates, Chartered Accountants, as the Joint
Statutory Auditors of the Company, and that, the necessary resolution
in this respect is being included in the notice of the Thirty First
(31st )Annual General Meeting for the approval of the Members of the
Company. The Company has received consent from both the Joint Statutory
Auditors and 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 of Companies Act, 2013 and Rules framed thereunder.
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 Joint Statutory Auditors Report does not contain any qualification,
reservation or adverse remark.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited accounts
containing the Financial Statements for the year ended March 31, 2015
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 are audited by M/s. T. R. Chadha & Co.,
Chartered Accountants together with M/s. Rajendra Neeti & Associates,
Chartered Accountants, the Joint 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 year ended March
31, 2015, 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 31,2015 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.
CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the listing agreement with Stock Exchanges, a
separate section titled ''Report on Corporate Governance'' and
''Management Discussion and Analysis'' forms part of this Annual Report.
The Report on Corporate Governance also includes certain disclosures
that are required, as per Companies Act, 2013.
Auditors'' Certificate confirming compliance with the conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement also forms part of this Annual Report.
FUTURE OUTLOOK
The key macro-economic indicators has been showing encouraging results
for some-time now, which has induced the Reserve Bank of India to cut
the repo rate twice during the last quarter of FY 2014-15. However,
banks started lowering the base rates only in April on push from the
Reserve Bank.
As per Government estimates, the Indian economic growth in 2015 is
expected at 7.4% as against 6.9% in previous year based on the new
formula the statistics department has started using to measure the
economy. The GDP is expected to grow at 7.5%-8% in 2015-16 in the
backdrop of improving macro-economic conditions. Indian wholesale
prices fell 2.33% year-on-year in March of 2015 as petrol prices
declined while food cost slowed. Consumer Price inflation dipped to
5.17%. CPI was lower on account of base effect on account of fall in
prices in food, housing and clothing inflation. The Reserve Bank of
India has a target of containing the inflation at 6% in 2015-16. Based
on the current global and domestic outlook this target is expected to
be achieved and would pave way for the RBI to further cut the policy
rates bringing down the interest rates in the economy.
The lowering of the interest rates and revival of the economy is
expected to give a lift to the housing finance market in 2015-16.
The real estate market in India is projected to post annual revenues of
US$ 180 billion ('' 10,800 billion) by the year 2020. The demand for
housing sector is anticipated to appreciate at compound annual growth
rate (CAGR) of 22 per cent during 2013-2018.
As all key business enablers are currently showing favorable signs,
your Company is positive and expects another year of healthy growth in
2015-16.
During the year under review, your Company has responded to an
opportunity announced by RBI to consider licensing of certain
differentiated banks under the category of Small Finance Bank (SFB) The
Company has applied for converting itself into a SFB and is awaiting
the outcome of the selection process of RBI. This opportunity is in
keeping with the stated aspiration of your Company to become a
diversified retail financial service provider and hence if selected it
will be an added advantage.
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 31,2015, in
the prescribed form MGT 9,forms part of this report and is annexed as
"Annexure - 6"
ACKNOWLEDGEMENTS
Your Directors wish to place on record their gratitude to the National
Housing Bank, the Company''s Customers, Bankers and other Lenders,
Members, Debenture holders, Depositors and others for their continued
support and faith reposed in the Company. The Board also places on
record its deep appreciation for the dedication and commitment of the
employees at all levels. The Directors would also like to thank BSE
Ltd., the National Stock Exchange of India Limited, National Securities
Depository Limited, Central Depository Services (India) Limited and the
Credit Rating Agencies for their co-operation.
For and on behalf of the Board
Kapil Wadhawan
Place : Mumbai Chairman & Managing Director
Dated : April 29, 2015 (DIN-00028528)
Mar 31, 2014
Dear Members
The Directors'' are pleased to present the Thirtieth Annual Report on
the business and operations of your Company together with the Audited
Accounts for the financial year ended March 31, 2014.
Financial Results
The Financial performance of the Company for the year ended March 31,
2014 is summarised below: -
(Rs. in crore)
2013-14 2012-13
Gross Income 4,969.69 4,078.94*
Less: Interest 3,782.58 3,119.36
Overheads 441.09 340.44*
Depreciation 10.91 8.46
Profit before tax 735.11 610.68
Less: Provision for taxation 206.11 158.83
Profit after tax 529.00 451.85
Add: Balance brought forward from the
previous year 362.28 128.85
Addition on Amalgamation - 153.60
Surplus available for appropriations 891.28 734.30
Appropriations
Transferred to Statutory Reserve under 160.00 100.00
Section 36(1)(viii) of the Income Tax
Act, 1961 read with Sec 29C of NHB Act,
1987
Transferred to General Reserve 200.00 200.00
Dividend for Earlier Year 0.03 0.08
Interim Dividend 38.50 23.42
Proposed Equity Dividend 25.69 38.47
Proposed 30th Anniversary Special Equity
Dividend 38.53 -
Tax on Dividends 17.45 10.05
Balance carried over to Balance Sheet 411.08 362.28
Total 891.28 734.30
* Figures of the Previous Year has been regrouped as detailed under
Note no. 21 of Notes forming part of the Financial Statement for the
year ended March 31, 2014.
Appropriations from net profit is as detailed in the table given above.
Performance
Your Company was founded in 1984 with a vision to create a financial
institution that believes in Inclusive Growth and which will transform
the life of every Indian by enabling access to easy housing finance to
fulfill his / her aspiration of home- ownership. Even after 30 years,
your Company continues to remain committed to its original vision and
thrive by serving the Lower and Middle Income (LMI) Group. Its systems
and policies are dedicated to serving this socio-economic group.
In spite of wavering economic conditions during the year under review,
your Company, in its 30th year of operations, maintained good
performance across all major business and operational parameters. The
interest rate levels remained elevated due to the tight monetary
policy, which was mainly guided by the high inflationary scenario in
the economy and volatile foreign exchange. This, coupled with an
uncertain political scenario had an impact on the real estate market,
which remained sluggish and saw price corrections at most locations.
The new launches declined in the backdrop of subdued sales. Despite
this, your Company earned Profit Before Tax of Rs. 735.11 crore for the
financial year ended March 31, 2014 as against Rs. 610.68 crore in the
previous financial year and the Profit After Tax of Rs. 529.00 crore as
against Rs. 451.85 crore in the previous financial year. The Total
Income for the year under consideration was Rs. 4,969.69 crore as
against Total Income of Rs. 4,078.94 crore in the previous year. The
Assets under Management (AUM) of your Company stood at Rs. 44,822.07
crore as at March 31, 2014 as against Rs. 36,116.45 crore in the
previous financial year.
Dividend
Your Directors in their meeting held on January 20, 2014 had declared
interim dividend of Rs. 3.00 per equity share for the financial year
2013-14, as compared to interim dividend of Rs. 2.00 per equity share
for the previous financial year 2012-13. The interim dividend was paid
to the members on February 8, 2014.
In recognition of the excellent performance of the Company, during the
year under review, your Directors have further recommended a dividend
to be paid out of current year profits of Rs. 2.00 per equity share to
the equity shareholders as final dividend, along with an additional
special 30th Anniversary celebration dividend of Rs. 3.00 per equity
share. Thus, the total dividend for the financial year 2013-14
aggregates to Rs. 8.00 per equity share as compared to Rs. 5.00 per
equity share for the financial year 2012-13.
The final dividend payable shall be subject to the approval of the
Members at the ensuing Annual General Meeting. The total outgo on
account of dividend (including dividend distribution tax) will be Rs.
120.20 crore as against Rs. 72.02 crore in the previous financial year.
The dividend on Equity Shares, if approved at the Annual General
Meeting, will be paid to those members whose names shall appear on the
Company''s Register of Members as at July 16, 2014. In respect of the
shares held in dematerialised form, the dividend will be paid to
members, whose names are furnished by National Securities Depository
Limited and Central Depository Services (India) Limited as beneficial
owners as at that date.
In terms of the listing agreement, your Company has also paid dividend
aggregating to Rs. 3 lakh towards Final Dividend for the year 2012-13
to the new members who were allotted shares prior to the book closure
date for the dividend payment but after the date of Balance Sheet.
Similarly, Equity shares that may be allotted under Employee Stock
Option Schemes or otherwise before the current date of the book closure
for payment of dividend shall rank pari passu with the existing shares
and shall be entitled to receive the dividend for the financial year
2013-14.
Lending Operations
The Sanctions and Disbursements of housing / other property loans,
during the year ended March 31, 2014, were Rs. 22,377.61 crore and Rs.
16,647.45 crore respectively, as against Rs. 17,336.85 crore and Rs.
13,357.73 crore, respectively, in the previous financial year. The
cumulative loan disbursement of the Company since inception were Rs.
58,810.18 crore.
Sale / Assignment of Loans
During the year, the Company has sold / assigned pool of housing loans
aggregating to Rs. 1143.90 crore. The Company will, however, continue
to collect the interest and EMI payments on these loans on behalf of
the acquirer of the loans and remit the same after retaining its
portion in terms of the individual agreements.
During the year, your Company has also securitised through the Special
Purpose Vehicle (SPV) route, housing loans and Loan against Property
contracts amounting to Rs. 1,472.37 crore. The Senior Series A1 Pass
Through Certificate (PTCs) issued by such SPVs carry the highest rating
of AAA (SO) by the external Credit Rating Agencies involved in the
process.
Simultaneously, your Company has subscribed to an amount of Rs. 60.71
crore in a subordinate Pass Through Certificates (PTCs) issued by the
aforementioned SPVs. These subordinate series A2 PTCs are rated as
AA-(SO) and AA(SO) by the same external rating agencies and are
required to be invested in, in compliance with the Minimum Retention
Requirement (MRR) prescribed by RBI in its Guidelines on Securitization
issued in 2012.
India''s first ever Mortgage Guarantee
Your Company has led the Indian mortgage market in availing of the
country''s first ever mortgage guarantee. This is yet another pioneering
move from your Company that provides the mortgage market a novel
template for a securitisation transaction. Further, the Company''s
vision of ensuring homes to every Indian, especially the low and middle
income group customers across the country''s small towns also receives
an impetus with a mortgage guarantee that releases the pressure of
credit risk to a large extent. In one of the securitisation
transactions, your Company has securitised a pool of priority sector
housing loans with Principal Outstanding of Rs. 37.83 crore with a
Mortgage Guarantee cover provided by India Mortgage Guarantee
Corporation Private Limited (IMGC). IMGC is the country''s first
mortgage guarantee company with major shareholders being NHB and
Genworth Financial Inc, USA among others.
The pool has been rated AAA (SO) by CARE Ltd. This guarantee has
enabled your Company to reduce the level of credit enhancement that
would have otherwise been required for securitisation, thereby
releasing capital which can be redeployed to earn higher returns.
Loan Book
As at March 31, 2014, the loan book stood at Rs. 40,596.63 crore as
against Rs. 33,901.72 crore in the previous year.
Transfer of amounts to Investors Education and Protection Fund (IEPF)
Pursuant to the provisions of Section 205A (5) and Section 205C of
Companies Act, 1956, the amounts (pertaining to dividends / deposits,
etc.) that remained unclaimed and unpaid for a period of 7 years from
the date it became first due for payment, have been transferred from
time to time, to Investor Education And Protection Fund (IEPF) on the
due dates, by the Company.
The Company has been intimating the members / depositors to lodge their
claim for payments due, if any, from time to time and such information
is also being mentioned in the Annual Report every year. Such claims as
and when received have been settled. Despite constant and sincere
efforts to pay the unclaimed dividend / deposits and interest thereon
to such members / depositors, certain amount still remains unclaimed.
Unclaimed Dividend
In terms of Section 205C of Companies Act, 1956, during the financial
year, your Company has transferred unclaimed dividend of Rs. 7.70 lakh
for the financial year 2005-06 and Rs. 8.08 lakh unclaimed Interim
Dividend for the financial year 2006-07 to Investor Education and
Protection Fund (IEPF) established by the Central Government. As per
the provisions of Companies Act, no claim would lie against the Company
and that any person claiming to be entitled to any amount / shares as
transferred to the said fund may apply to the authority for
administration of the fund in accordance with the provisions as laid
down by the Central Government.
Unclaimed Deposits
During the year 2013-14, in terms of Section 205C of the Companies Act,
1956, an amount of Rs. 18.87 lakh was transferred to Investor Education
and Protection Fund (IEPF) being the amount of deposits along with
interest thereon, that remained unclaimed and unpaid for a period of 7
years from the date it became first due for payment.
Pursuant to the provisions of Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying
with companies) Rules, 2012, your Company has uploaded the details of
unpaid and unclaimed dividend / fixed deposit amounts lying with the
Company as at July 23, 2013 (i.e. the date of 29th Annual General
Meeting) on the Company''s website and has also filed the same with the
Ministry of Corporate Affairs. Members / Depositors who have not yet
claimed the previous year(s) dividend / fixed deposit amount may write
to the Company or to the Registrar and Share Transfer Agent.
Authorised Share Capital
The Authorised Share Capital of the Company stands at Rs. 828,00,00,000
(divided into 74,80,00,000 Equity shares of Rs. 10/- each, 75,000,000
Redeemable Non Convertible Preference Shares of Rs. 10/- each and
500,000 Redeemable Non Convertible Preference Shares of Rs. 100/-
each). During the year, there has been no change in the Authorised
Share Capital of the Company.
Paid-up Share Capital
During the year, your Company allotted in tranches 2,01,531 equity
shares of Rs. 10/- each, upon exercise of stock options to eligible
employees of the Company under the Employee Stock Option Schemes - 2008
and 2009.
In view of the above, the issued, subscribed and paid-up equity share
capital of the Company stands increased to Rs. 128,42,02,400 divided
into 12,84,20,240 equity shares of face value of Rs. 10/- each.
Resource Mobilisation
Despite tight liquidity conditions and subdued sentiments in the stock
market, the Company''s fund mobilisation from banks, institutions, issue
of non-convertible debentures and securitisation of receivables
continued to be smooth on account of its innovative resource
mobilisation techniques, good track record of debt servicing,
investors'' confidence etc.
Your Company has been able to maintain the cost of borrowings, keeping
abreast with the market scenario to pre-empt any adverse liquidity and
interest rate movements. Your Company continued to keep tight control
over the cost of borrowings through negotiations with lenders, thus
raising resources at competitive rates from its lenders, ensuring
proper asset-liability match. The borrowings through the issue of
Commercial Papers and Short Term Loans from banks helped your Company
to reduce the exposure to high cost working capital and corresponding
interest cost.
Total debt funds as at March 31, 2014 amounted to Rs. 39,486.89 crore,
as against Rs. 32,058.19 crore in the previous year, National Housing
Bank (NHB) refinance constituted 5%, term loans from banks and
financial institutions 69%, public deposits 7%, non-convertible
debenture and other innovative debts instruments 12%, commercial paper
4% and short-term funds from banks and others 3%. The Company''s average
cost of borrowings as at March 31, 2014 was 10.59% as against 10.63% in
the previous year.
Loans from Banks
As a part of its liability management, your Company endeavours to
diversify its resource base in order to achieve an appropriate maturity
structure and minimise the weighted average cost of borrowed funds.
Your Company continued to leverage on its long term relationship with
banks and thus tied up fund based working capital limit to Rs. 500.00
crore as at the end of the financial year. Your Company also raised
term loans to the extent of Rs. 7,695.00 crore during the year at the
competitive rates available in the market and continued its focus on
domestic sources.
Refinance from National Housing Bank (NHB)
During the year, your Company has drawn refinance amounting to Rs.
350.00 crore under National Housing Bank''s Refinance Scheme to Housing
Finance Companies.
Subordinated Debts
Subordinated Debts continue to be another source for funding the
operations of the Company. Subordinated Debts represent long term
source of funds for the Company and the Company raised Rs. 85.00 crore
through the issue of long-term Unsecured Redeemable Non-Convertible
Subordinated Debentures. The subordinated debt was assigned ''BWR AAA''
rating by Brickworks and ''CARE AA'' rating by CARE.
As at March 31, 2014, your Company''s outstanding subordinated debt were
Rs. 1191.50 crore. The debt is subordinated to present and future
senior indebtedness of your Company. Based on the balance term to
maturity, as at March 31, 2014, Rs. 1048.12 crore of the book value
(discounted) of subordinated debt is considered as Tier II under the
guidelines issued by the National Housing Bank (NHB) for the purpose of
capital adequacy computation.
Non-Convertible Debentures (NCDs)
Your Company continues to issue fully secured redeemable convertible
debentures on private placement basis. During the year under review,
your Company has issued Secured Redeemable Non-Convertible Debentures
(the "Debentures") amounting to Rs. 2,057.90 crore from banks and
financial institutions by way of issue of NCDs and Zero Coupon NCDs.
The outstanding balance of Debentures including interest accrued and
due as at March 31, 2014 amounts to Rs. 4,908.89 crore.
Debenture Trust Agreement(s) in favour of GDA Trusteeship Services
Limited and IDBI Trusteeship Services Limited for the aforesaid issues
were executed. The proceeds of the aforesaid issue were utilised for
making disbursements to meet the housing finance requirements of the
borrowers of the Company, as well as for general corporate purposes.
Your Company has duly paid the interest due on the aforesaid Debentures
on time. The Company''s NCDs have been assigned the rating of CARE
"AA " by CARE and "BWR AAA" by Brickworks.
Perpetual Debt Instrument
During the year under review, your Company issued Innovative Perpetual
Debt Instruments ("IPDI") qualifying for Tier II capital to increase
its Capital Adequacy Ratio and fund its growing business operations.
Your Company has raised the IPDI of principal amount of Rs. 35.50
crore, which qualifies as Tier II capital of the Company. The
outstanding as at March 31, 2014, amounts to Rs. 185.70 crore.
Commercial Paper
The Commercial Paper (CP) program of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the rating of CRISIL A1 (A One Plus). During the year, your
Company issued CPs to the extent of Rs. 5,320.00 crore in tranches and
placed them with investors at competitive rates of interest. As at
March 31, 2014, Commercial Papers outstanding amount stood at Rs.
1,470.00 crore.
External Commercial Borrowings (ECB)
Your Company has drawn ECB of USD 70 million during the FY 2013 -14. As
liquidity in the international market improves, your Company will
endeavour to mobilise much more long term funds under the ECB window
for on-lending to borrowers in the housing sector. This will equip your
Company with long term funds and enable to maintain a healthy
asset-liability profile.
The security details of the secured borrowings made by the Company are
mentioned at Note No. 5 in the Notes to accounts forming part of the
financial statement for the year ended March 31, 2014.
Deposits
The financial year 2013-14 started off on a positive note with a Retail
Liability portfolio base of Rs. 1,923.72 crore on March 31, 2013. In
the year 2013-14, the Retail Liability portfolio scripted a
year-on-year growth of 35% and has risen to the level of Rs. 2,595.45
crore as at March 31, 2014. Increase in depositors'' accounts to
1,65,055 numbers is significant testimony of increasing customer
confidence in the Company. This reflects a year-on-year growth of 37%.
Your Company sees retail liability as a major source for funding and
plans to have a significant proportion of it in its diversified
liability portfolio. To create further impetus on this front, the
Company took several initiatives during the year to extend its reach by
expanding network and connecting with the customers. Several focused
projects were undertaken during the year towards enhancing the
productivity of the branches and upgrading customer service levels
including automation of few processes, thus helping in reducing
turnaround time etc.
As of March 31, 2014, 13,481 depositors who did not claim the deposits
(along with interest due thereon) were aggregating to Rs. 29.42 crore.
Depositors have been intimated regarding the maturity of their
deposits, with a request to either renew or claim their matured
deposits. Additionally, a process has been initiated whereby from the
Centralised Call Centre, courtesy calls are made informing depositors
of their matured deposits. Fixed Deposits accepted by the Company are
secured appropriately to the extent of floating charge on approved
securities and bank deposits created by way of Deed of Trust, as per
the guidelines issued by the National Housing Bank. The security
details of the aforesaid secured borrowings made by the Company are
mentioned at Note No. 5.4 in the Notes to accounts forming part of the
financial statement for the year ended March 31, 2014.
Credit Rating
The Company''s borrowings enjoy the following credit ratings:
Nature of Borrowing Rating / Outlook
CARE Brickworks ICRA CRISIL
Short-Term Debt /
Commercial Paper CRISILA1
Fixed Deposits CARE AA (FD) BWR FAAA - -
Subordinated Debt CARE AA BWR AAA - -
Non-Convertible
Debentures CARE AA BWR AAA - -
Perpetual Debenture CARE AA- BWR AAA - -
Long-term Bank Loans CARE AA - - -
Structured
Obligations CARE AAA(SO) ICRA AAA(SO) CRISIL AAA(SO)
Capital Adequacy
As required under National Housing Bank Directions, your Company is
presently required to maintain a minimum capital adequacy of 12% on a
stand-alone basis. In addition, the National Housing Bank Directions
also require that your Company transfers minimum 20% of its annual
profits to a reserve fund. The following table sets out our capital
adequacy ratios as at March 31, 2012, 2013 and 2014.
Particulars As at March 31
2014 2013 2012
Capital Adequacy 17.16% 16.52% 17.42%
Ratio
Your Company''s Capital Adequacy Ratio is at 17.16% as at March 31,
2014, which provides an adequate cushion to withstand business risks
and is above the minimum requirement of 12% stipulated by the National
Housing Bank.
Non-Performing Assets and Provisions for Contingency
Your Company adhered to the prudential guidelines for Non- Performing
Assets (NPAs), issued by the National Housing Bank (NHB) under its
Directions of 2010, as amended from time to time. The Company did not
recognise 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 National Housing Bank
Directions. The Company has also made additional provision to meet
unforeseen contingencies.
The amount of Gross Non-Performing Assets (NPA) as at March 31, 2014
was Rs. 317.52 crore, which is equivalent to 0.78% of the loan
portfolio of the Company, as against Rs. 239.32 crore i.e. 0.71% of the
loan portfolio as at March 31, 2013. The net NPA as at March 31, 2014
has increased to Rs. 209.87 crore i.e. 0.52% of the loan portfolio
vis-a-vis Rs. 155.96 crore i.e. 0.46% of the loan portfolio as at March
31, 2013. The total cumulative provision towards loan and other assets
as at March 31, 2014 is Rs. 331.35 crore as against Rs. 262.67 crore in
the previous year. During the year, the Company has written off Rs.
3.55 crore of loans / receivables as against Rs. 4.94 crore during the
previous year.
In order to prevent frauds in loan cases involving multiple lending
from different banks / housing finance companies, the Government of
India has set up the Central Registry of Securitisation Asset
Reconstruction and Security Interest of India (CERSAI) under Section 20
of the SARFAESI Act 2002 to have a central database of all mortgages
created by lending institutions. The object of this registry is to
compile and maintain data relating to all transactions secured by
mortgages. Accordingly, your Company is registered with CERSAI and the
data in respect thereto is being submitted, from time to time.
The Securitisations and Reconstructions of Financial Assets and
Enforcement of Security Interest Act 2002 (SARFAESI) has proved to be a
useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
defaulters. The Company has acquired certain assets under SARFAESI
which are retained for the purpose of sale under the rules and
regulations of SARFAESI involving Rs. 44.19 crore.
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. During the year, the Investment policy was reviewed
and revised by the Board of Directors. The decisions to buy and sell
upto 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, surplus funds are generally being parked with liquid fund
schemes of mutual funds and short term deposits with banks. During the
year, your Company earned Rs. 63.52 crore by way of Income from Mutual
Funds & financial / commodity derivatives and Rs.38.26 crore by way of
interest on deposits placed with banks. At the end of the year, your
Company maintained Rs. 531.56 crore by way of deposits 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, 2014, your Company has invested Rs. 150.87
crore (book value - gross) in approved securities comprising of
government securities, government guaranteed bonds and by way of Bank
Deposits for Rs. 158.83 crore. It is being maintained within the limits
prescribed by the National Housing Bank.
Insurance Joint Venture
During the year under review, your Company and Prudential Financial,
Inc. (PFI) entered into Joint Venture (JV), whereby your Company
acquired 16,29,01,250 equity shares being 50% of equity stake in DLF
Pramerica Life Insurance Company Ltd., a registered life insurance
Company in India regulated by Insurance Regulatory Development
Authority (IRDA) from DLF Ltd at deminimus value of Rs. 1. The Company
however, has capitalised the expenses incurred in relation to the above
acquisition, as cost of investment. Subsequently, the Company
subscribed to 72,86,589 number of equity shares of Rs. 10/- each for
Rs. 729 lakh, however, maintained its holding at 50%.
Consequently, the name of the life insurance company was changed to
DHFL Pramerica Life Insurance Company Ltd. (DHFL Pramerica).
Your Directors are pleased to inform you that the operations of DHFL
Pramerica has recorded a turnaround since your Company entered into the
said venture and is expected to start generating returns from the next
financial year. This has been possible due to the strong distribution
network created by your Company.
Associate Company
During the year under review, your Company made further investment in
Avanse Financial Services Ltd., a Non Banking Finance Company
registered with Reserve Bank of India, to the tune of Rs. 24.39 crore.
However, the percentage of shareholding in the said Company remained
same at 48.50% of the total paid-up share capital of Avanse Financial
Services Ltd.
As on date of this report, your Company does not have any subsidiary
Company and hence no disclosure is required to be made, pursuant to
Section 212 of the Companies Act, 1956.
Information Technology and Communications
During the financial year 2013-14, your Company took various steps to
strengthen its IT platform, few of which are as under:
In line with the growing business, the data centre was outsourced to
IBM, making the vendor responsible for 24 x 7 hosting, management and
upgradation leaving the Company to focus on its core competencies.
The Company implanted a disaster recovery site at a seismically less
active zone to avoid data loss and termination of business operations
in case of a national disaster.
The Company has set up portals for the benefits of its fixed deposit
brokers, helping them access information about their customers, saving
crucial time and manpower allocation spends.
The Company strengthened its Regional Processing Unit with adequate
back-up facilities; it further strengthened connectivity with a primary
fast speed network with secondary back-up network connectivity.
Your Company is working with Tata Consultancy Services to create a 5
year IT roadmap that is expected to help in terms of capacity,
flexibility, accessibility and stability. Your Company further expects
to implement a rule-based business management solution along with an
efficient management system.
Human Resources
Your Company''s vision is to become an employer of choice by providing a
compelling employee value proposition which attracts the best talent in
the industry and ensures their development, retention and contribution
to the Company''s success. Your Company''s strategy from the people
perspective can be defined at three levels:
Human Resources: Align competencies with business strategy. Increase
focus on "how we achieve than what we achieve."
Knowledge Management: Build and align information systems with business
strategy. Build and share intellectual capital. Create effective
management processes, programs and reporting.
Organisation / Culture: Align culture with business strategy.
Transform culture to align employee action with business objectives.
Use culture to gain competitive advantage.
Thus, the key focus of your Company has always been towards development
of the required skills of the employees, retention of talent,
appropriate rewards and recognition policies, to organise employee
engagement activities and to provide a fair performance management
mechanism.
The commitment, competence and dedication of the employees of your
Company have contributed to the business growth of the Company.
During the year, your Company focused on the cultural integration of
erstwhile First Blue Home Finance Limited into the Company and the said
integration process was completed successfully.
The workforce strength of your Company as at March 31, 2014 was 1,891.
The total workforce cost during the year was Rs. 176.10 crore as
compared to Rs. 140.69 crore in the previous year. The increase in cost
is mainly due to the increase in workforce to meet the requirements on
account of significant expansion in terms of geography as well as
business volumes, and the salary revisions effected during the year.
Learning & Development
Your Company believes in investing in people to develop and expand
their capability to maximise their potential. Learning & Development is
thus a part of the Corporate HR function.
During the year 2013-14, your Company created stronger depth and focus
in its skill-building efforts. Your Company 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 and subject matter experts from
business teams.
Training imparted to employees during the year covered a wide range of
functional areas including sales skill development programs, Credit
analytical skills and appraisal techniques, Programs for operational
excellence, Risk and fraud management and Induction program for new
joinees i.e Aagman and other programmes based on business grooming and
etiquettes and monitoring techniques. Training on KYC & AML Policies
were also imparted at all levels.
Your Company has partnered with the best-in-class leadership trainers
of the country for a corporate breakthrough workshop for key position
holders and business managers. External training programs and
cross-functional exposure provided to the employee throughout the year
was an extra edge. Your Company has also initiated to build a learning
infrastructure to ensure availability of skilled and empowered
workforce.
A third-party framework, benchmarked as one of the best, has been hired
for administering study and analysing it, with focus on measuring and
improving employee engagement and learning quotient. Taking concrete
steps based on the study findings will help the organisation in
building a stronger and more engaged workforce.
Thus, the Human Resources initiatives and Learning & Development
systems and processes are designed to enhance employee engagement,
organisational capability and vitality so as to ensure that your
Company is positioned for competitive superiority and is capable of
achieving ambitious plans for growth.
Particulars of Employees
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 read with the Companies (Particulars of Employees) Rules,
1975, as amended, the names and other particulars of employees are set
out in the annexure to the Directors'' Report. In terms of the
provisions of section 219(1)(b) (iv) of the Companies Act, 1956 the
Directors'' Report is being sent to all the Members of the Company
excluding the aforesaid information. Any Member interested in obtaining
such particulars may write to the Company Secretary of the Company.
Employees Stock Option Scheme (ESOS)
Pursuant to the resolution passed by the Members at the Annual General
Meeting held on July 27, 2007, your Company had introduced the Employee
Stock Option Scheme 2008 and 2009 (referred to as "the Scheme") to
enable the employees of your Company to participate in the future
growth and financial success of the Company.
The Nomination & Remuneration Committee of the Board of Directors of
the Company, inter-alia, administers and monitors the Employee Stock
Option Schemes of the Company, in accordance with Securities & Exchange
Board of India (Employee Stock Option Scheme & Employee Stock Purchase
Scheme) Guideline 1999 (SEBI Guidelines).
The Company has received a certificate from the Auditors of the Company
that the Scheme has been implemented in accordance with the SEBI
Guidelines and the resolution passed by the Members. The said
Certificate would be placed at the ensuing Annual General Meeting for
inspection by members.
The particulars of options granted under the said Schemes are
Particulars ESOS-2008 ESOS 2009 ESOS 2009
Plan I Plan II
Options Granted 1422590 1275000 1234670
under the schemes
Options Exercised 1072084 797607 Nil
up to 31.03.2014
Options Lapsed 251130 237723 277520
upto 31.03.2014
Options 99376 239670 957150
Outstanding at the end
of the year
Options unvested at Nil Nil 493868
the end of the year
Options Exercisable 99376 239670 463282
at the end of the year
Conservation of Energy, Technology Absorption and Foreign Exchange
Earning and Outgo
The particulars regarding foreign exchange earnings and expenditure
appear at Note No. 40 in the Notes forming part of the financial
statement for the year ended March 31, 2014.
Since the Company is not engaged in any manufacturing activity, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 are not applicable.
Insurance Coverage to Borrowers
Your Company is a Group Administrator / Master Policy Holder of
Mortgage Reducing Term Assurance Products (MRTA) of leading insurers
like ICICI Prudential LIC for ''Home Assure'' product, Bajaj Allianz
LIC for ''DHFL Home Shield'' product, Kotak LIC for ''Group Assure''
product and DHFL Pramerica LIC for ''DHFL Home Shield'' product. All
the above are single premium MRTA products. These products cover life
risk of the borrowers to the extent of loan availed. In the event of
the unfortunate demise of any borrower, the insurance Company settles
the claim to the Group Administrator by paying an amount equivalent to
the outstanding loan balance and remaining balance (if any) is paid to
the nominee of the borrower.
In addition, your Company also offered ''Home Safe Plus'' a general
insurance product from ICICI Lombard General Insurance Co. Ltd. to
borrowers who have availed loan against property (LAP) to cover risk
pertaining to accidental death of borrowers, damage to property,
critical illness and loss of employment (upto 3 EMIs). The primary
objective is to insure the loan portfolio against default due to
unforeseen events with the borrowers.
Your Company has insured 94% of new customers acquired and insured 68%
of total loan portfolio acquired in financial year 2013-14. The overall
premium growth in financial year 2013-14 was 11% over financial year
2012-13.
Insurance of Company''s Property
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate event of such incidents.
Directors'' and Officers'' Liability Insurance Policy
Your Company has taken Directors'' and Officers'' Liability Insurance
Policy which covers the Board of Directors and Officers of the Company
(employees in managerial supervisory position) against the risk of
financial loss including the expenses pertaining to defense cost, legal
representation expenses arising in the normal course of business.
Insurance Coverage to Employees
Your Company has in place a Mediclaim policy for its employees and
their dependant family members and also has Group Personal Accident
Policy, which provides uniform benefits to all the employees.
National Housing Bank (NHB) Guidelines
The Company has complied with the provisions of the Housing Finance
Companies (NHB) Directions, 2010 as prescribed by NHB and has been in
compliance with the various Circulars, Notifications and Guidelines
issued by National Housing Bank (NHB) from time to time. The Circulars
and the Notifications issued by NHB are also placed before the Audit
Committee / Board at regular intervals to update Committee / Board
members on the same.
Risk Management
Risk Management is an integral part of your Company''s business. With
over three decades of experience in the lending business, your Company
is successfully achieving growth while maintaining high standards of
asset quality through risk management and mitigation practices that are
actively focused on evaluation of credit, market and operational risk.
The risk strategy laid down by your Company helps foster a disciplined
culture of risk management and control. In conjunction with these
practices, your Company intends to optimise its capital needs through
growth, by achieving highest returns on capital employed while managing
risks appropriately.
Your Company has focused on promoting an independent Risk Management
function handled by a Risk Management expert. The team is involved at
all stages of the value chain - sourcing of transaction, analysing the
proposals, suggesting suitable risk mitigates and risk mapping on
portfolio and product levels from a risk-reward perspective. The risk
management team works closely with the business team to develop a deep
understanding of a rapidly evolving market environment, which helps the
risk management function in optimising risk-adjusted return on capital.
Your Company continuously monitors portfolio concentration based on
industry, borrower group, etc. and defines limits for the above.
Portfolio level delinquency matrices are tracked at regular intervals
with focus on detection of early warning signals of stress. These
limits are periodically reviewed based on changes in the macro-economic
environment, regulatory environment and industry dynamics. Existing
credit exposure in the portfolio is continuously monitored and
reviewed. Key sectors are analysed in detail to suggest strategies,
considering both risks and opportunities. Corrective action, if
required, is taken well in advance based on early warning signals.
Your Company follows the best industry standards for management of
credit risk, market risk (comprising of liquidity risk, interest rate
risk and exchange rate risk) and operational risk and has put in place
a comprehensive Risk Management Policy envisaging a robust risk
management programme.
Asset Liability Management Committee (ALCO)
The Asset Liability Management Committee (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. ALCO ensures
that the liquidity and interest-rate risks are contained within the
limits laid down by the Board. The Company has also implemented NHB''s
Asset Liability Management Guidelines.
Codes, Standards & Policies
Know Your Customer & Anti Money Laundering Measure Policy
Your Company has a Board approved Know Your Customer & Anti Money
Laundering Measure Policy (KYC & AML Policy) in place and adheres to
the said Policy. The said Policy is in line with the National Housing
Bank guidelines.
The Company has also adhered to the compliance requirement in terms of
the said policy relating to the monitoring and reporting of cash /
suspicious transactions. The Company furnishes to Financial
Intelligence Unit (FIU), India, in the electronic medium, information
of all cash transactions of the value of more than Rupees ten lakh or
its equivalent in foreign currency and suspicious transactions whether
or not made in cash, in terms of the said Policy.
Fair Practice Code
Your Company has in place a Fair Practice Code (FPC), which includes
guidelines on appropriate staff conduct when dealing with the customers
and on the organisation''s policies vis-a-vis client protection. The FPC
captures the spirit of the National Housing Bank guidelines on fair
practices for Housing Finance Companies.
During the year under review, FPC was modified by the Board and the
grievance redressal mechanism within the Company was further
strengthened.
Code of Conduct for Board Members and the Senior Management
Your Company has adopted a Code of Conduct for its Board Members and
Senior Management personnel. The code requires the directors and
employees of the Company to act honestly, ethically and with integrity
and in a professional and respectful manner.
The declaration by the Chairman & Managing Director of the Company
regarding compliance with the Code of Conduct for Board Members and
Senior Management is annexed with the Corporate Governance report.
Code for Prevention of Insider Trading Practices
Your Company has formulated and adopted a Code for Prevention of
Insider Trading Practices in accordance with the model code of conduct
as prescribed under the SEBI (Prohibition of Insider Trading)
Regulations, 1992, as amended. The code lays down guidelines, which
includes procedures to be followed and disclosures to be made while
dealing in the shares of the Company. The code is applicable to the
promoters, directors, senior designated employees and their dependents
and the said persons are restricted from dealing in the securities of
the Company during the ''restricted trading periods'' notified by the
Company, from time to time.
Code of Business Ethics (COBE)
During the year, your Company adopted a Code of Business Ethics [COBE]
which lays down principles and standards that govern the activities of
the Company and its employees to ensure and promote ethical and legal
behaviour within the organisation.
Whistle Blower Policy
Your Company believes and is committed to adhere to high ethical
standards and compliance with laws and regulations applicable to its
business.
During the year, your Company adopted a Whistle Blower Policy which
provides for a vigil mechanism that encourages and supports its
Directors and employees to report to the management / Chairperson of
the Audit Committee instances of unethical behaviour, actual or
suspected, fraud or violation of the Company''s Code of Conduct or
Ethics Policy.
The said policy, however, provides for adequate safeguards against the
victimisation of the Whistle Blower who avail this mechanism. The
policy also provides for direct access to the Chairperson of the Audit
Committee in exceptional cases.
Sexual Harassment Policy
During the year under review, the policy on "Workplace Sexual
Harassment" was formulated and an Internal Complaints Committee (ICC)
was also constituted as per the provisions of "Sexual Harassment of
Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The said policy seeks to protect women employees from sexual harassment
at the place of work. The primary objective of the same is to safeguard
the interest of female employees in the Company and also provides for
punishment in case of false and malicious representations.
The policy has been communicated to the employees and is also posted on
the Company''s intranet. Few training sessions were also conducted
during the year to create awareness amongst the employees on the same.
During the year, one complaint was reported to the ICC but post
investigation of the matter the allegations could not be proved and
thus no action was taken in the matter.
Listing of Shares of the Company
The Equity Shares of your Company continue to remain listed on the BSE
Ltd. and the National Stock Exchange of India Limited.
The Company has paid the listing fees as payable to the BSE Ltd. and
the National Stock Exchange Limited for the financial year 2013-14.
Marketing
Your Company''s purpose as articulated by its Founder Chairman, Late
Shri Rajesh Kumar Wadhawan is that, "every Indian should have a home
of his own". During the year, your Company continued to reinforce this
purpose through its various communication and engagement activities.
The highlights of the year included:
Touching tens of million of lives with our brand message via
traditional advertising.
Engaging 1.2 million unique lives digitally; not only in India but also
Non-Resident Indians (NRIs) residing across the globe.
Continuous media engagement efforts resulted in DHFL maintaining the
highest visibility (single brand Share of Voice) through Public
Relations (PR) across television and print.
Your Company leveraged the ''Mumbai Indians'' IPL association by
adopting a mix of traditional and digital media, while innovating for
newer engagement solutions.
- Your Company''s innovative brand engagement ideas continued
throughout the year; like online chats with experts, direct-to-
consumer FD communication etc.
- As a result of the integrated marketing efforts, direct impact was
seen in the business generated via DHFL Call Centre and a 38 % increase
was observed in the business generated as against the corresponding
previous year.
- Your Company''s Chairman & Managing Director, Mr. Kapil Wadhawan,
was recognised amongst the Top 100 CEOs in the Business Today listing.
- Mr. Kapil Wadhawan ranked 13th in the Business World Listing of
India''s Most Valuable CEOs in FY 2014.
During the year, your Company''s business excellence was also recognised
at various award forums, including:
- Best Employer Award at IPE BFSI Awards 2013-14.
- Excellence in Innovative Marketing Award at MCHI - MMR & BKC Expo
2013-14.
- Udyog Rattan Award 2013-14.
Your Company launched a festive campaign to promote home buying during
the auspicious season. Launched as ''DHFL Express Loans'', this
campaign highlighted your Company''s customer-centric approach and
realtime home loan processing. This was further accentuated by a
campaign that propagated the 30-year variant of the DHFL Express Loans.
Your Company also launched a Fixed Deposit campaign to promote
deposit-taking during the festive season. This campaign reached out to
small investors across the length and breadth of the country.
Your Company effectively used various mediums including print, radio
and outdoors to communicate these value-driven messages across multiple
locations. To propel existing demand, your Company organised various
ground-level activities including ''Home Loan Melas'' and ''Spot
Sanction Activities'' in the interiors of the country.
To render a thought-provoking message to consumers who were
contemplating their home buying decision whilst living in rental
accommodation, your Company launched ''Rent Banao EMI'' campaign in
February 2014. Your Company, in its 30th year of operations has
communicated and re-instilled the aspiration of owning a home as a
critical element of one''s identity, safety and security - this campaign
was a demonstration of this mission.
With India being a cricket-frenzy nation, association with Mumbai
Indians in the IPL brought about higher brand recall for your Company.
Your Company planned activations and engaged with the large Mumbai
Indian fan-following through both traditional and digital channels.
With ardent fans of Mumbai Indians and its customers getting the
opportunity to meet their favourite squad, the association enhanced the
Company''s brand connect.
To leverage customers in the digital space, your Company started
specific activities in the World Wide Web to generate interest in
sales. Campaigns like Express Home Loan, Rent Banao EMI and NRI Service
Assurance were extended to the digital space making them 360° brand
campaigns. Your Company has built a huge fan-following on various
social platforms including Facebook, Twitter, LinkedIn and YouTube.
Your Company has received editorial interest from various leading
national and regional newspapers, magazines and TV channels during the
financial year 2013-14. It has garnered over 50% share of voice with
respect to the total news on housing finance and your Company has been
recognised as a leading player in the financial services sector in
India.
Branch Network
Your Company has a strong distribution network of 162 Branches, 92
Service Centers, 19 Camp Locations, 20 Zonal / Regional Offices, 2
Disbursement Hubs and 2 Collection Centers in India. Additionally,
your Company has international representative offices located at London
and Dubai.
During the year, your Company shifted its Corporate Office to a new
premise at TCG Financial Center, 10th Floor, BKC Road, Bandra-Kurla
Complex, Bandra (E), Mumbai 400051.
The Company''s strong network coverage is designed to provide increased
penetration to cater to the evolving needs of the existing customer
base and tapping the growing potential customer base throughout India.
Alliances & Business tie-up
Your Company has entered into strategic housing loan distribution and
syndication arrangements with public and private sector banks. The
present allies are Punjab & Sind Bank for Northern India, United Bank
of India for Eastern India, Central Bank of India for Central India and
Yes Bank Limited for Pan India. This unique arrangement provides your
Company a wider reach and access to the Banks'' network, where both
partners are set to gain. The additional points of sales through ally
banks'' strong network coverage are aimed at providing increased
footprint to your Company for catering to the evolving needs of our
existing customer base and tapping a growing potential customer base
across India. The success of one alliance led to another and today your
Company has emerged as a major player in all the locations of alliance
and has more than Rs. 1,650 crore of assets generated through these
alliances.
Your Company has taken pioneering steps during the year towards
expansion of an existing alliance at Delhi NCR bringing with it large
network of branches of the ally Bank, to source business. This
expansion presently under operationalisation brings good potential for
business. Further, improving upon its innovative business models under
syndication route, implemented with Yes Bank Ltd. resulted in business
benefits including fee income to your Company. Your Company also
benefitted from a business generation arrangement with FedBank
Financial Services Ltd.
The alliance arrangements not only reflect acknowledgement of your
Company''s business models and standing in the financial circles, but
also add significantly to the financials of the organisation. The
initiatives are being lauded in the Banking and Finance industry and
your Company expects to expand the existing alliances geographically
and also enter into some new alliances.
Corporate Social Responsibility (CSR)
Your Company''s Business Model is based on financial inclusion and
social betterment for the common man and thus it always endeavours to
associate with programs having a larger social agenda. During the year,
your Company participated in Mumbai Marathon in association with Mumbai
Mobile Creches. Mumbai Mobile Creches, an NGO is in existence since
1972 and has been providing education, healthcare, nutrition and
shelter for children living on construction sites, while their parents
are at work.
During the year, your Company supported primary and secondary education
of over 100 students from economically weaker sections of the society
by contributing towards their education fees. This initiative was
undertaken through Shri Rajesh Kumar Wadhawan Education Trust.
Your Company also organised Blood Donation Camps during the year, which
saw tremendous participation from your Company''s employees.
During the year, your Directors approved a Corporate Social
Responsibility Policy basis the recommendations received from the
Corporate Social Responsibility Committee of the Board. The Corporate
Social Responsibility Committee has been entrusted with the
responsibility of recommending to the Board the activities / projects /
programs to be undertaken by the Company as per its Corporate Social
Responsibility Policy.
Directors
During the period under review, on account of the retirement of Mr.
Anthony Hambro from M/s. Caledonia Investments Plc, (Caledonia) his
nomination was withdrawn from the closing hours of July 23, 2013 and
Mr. James Michael Beale Cayzercolvin was nominated by Caledonia as
their Nominee Director with effect from July 24, 2013 in place of Mr.
Anthony Hambro. However, due to the pre occupation of Mr. James
Michael Beale Cayzercolvin, Caledonia withdrew his nomination and in
his place Mr. Kaikhushru Vicaji Taraporevala was nominated as the
Nominee Director of Caledonia effective October 21, 2013 and was
appointed as an additional director on the Board of the Company. The
Board places on record its appreciation for the valuable contribution
made by Mr. Anthony Hambro and Mr. James Michael Beale Cayzcrcolvin
during their tenure as Directors of the Company.
As per the provisions of Section 161 of the Companies Act, 2013, Mr.
Kaikhushru Vicaji Taraporevala holds office only up to the date of the
forthcoming Annual General Meeting (AGM) of the Company. The Company
has received a notice in writing from a member proposing his
appointment as a Director of the Company. The approval of members is
being sought for appointment of Mr. Kaikhushru Vicaji Taraporevala as a
Director of the Company.
In accordance with the provisions of Section 149 of the Companies Act,
2013, Members'' approval is being sought for the appointment of Mr. R.
P. Khosla, Mr. G. P. Kohli, Mr. Ajay Vazirani, Mr. V. K. Chopra and Mr.
Mannil Venugopalan as Independent Directors for a term of 5 consecutive
years, upto March 31, 2019. The Company has received requisite notices
in writing from the members proposing the names of Mr. R. P. Khosla,
Mr. G. P. Kohli, Mr. Ajay Vazirani, Mr. V. K. Chopra and Mr. Mannil
Venugopalan for appointment as Independent Directors. The Company has
received declarations from all the Independent Directors of the Company
confirming that they meet the criteria of independence as prescribed
under section 149(6) of Companies Act, 2013 and Clause 49 of the
Listing Agreement with the Stock Exchanges.
In accordance with the provisions of Section 152 of the Companies Act
2013 and Article of Association, Mr. Dheeraj Wadhawan, Director of your
Company retires by rotation and being eligible; offers himself for
re-appointment at the ensuing Annual General Meeting.
Necessary resolutions for the appointment / re-appointment of the
aforesaid directors have been included in the notice of the ensuing
Annual General Meeting.
Brief resume of the Directors proposed to be appointed / re- appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership / chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges in India, are provided in the annexure to the
Notice of the Thirtieth Annual General Meeting being sent to the
members along with the Annual Report. All the directors of the Company
have confirmed that they are not disqualified for being appointed /
re-appointed as directors in term of sub section 2 of Section 164 the
Companies Act, 2013.
Internal Audit
Your Company has a well-equipped internal audit department carrying out
a regular independent evaluation of various activities undertaken by
the Company through its branches, Regional Offices, Zonal Offices and
National / Corporate Office. The Internal Audit Department is being
headed by senior management personnel with reporting lines to the Audit
Committee of the Board and dotted line reporting to the Chairman and
Managing Director. The audit function maintains its independence and
objectivity while carrying out assignments. It evaluates on a
continuous basis, the adequacy and effectiveness of the internal
control mechanism, adherence to policies and procedures, as well as
regulatory and legal requirements. The function also proactively
recommends improvement in operational processes and suggests
streamlining of controls against various risks. The Audit Committee of
the Board reviews the performance of the internal audit function on a
quarterly basis, gives direction to its functionaries and reviews
effectiveness of internal control systems.
Additionally, practicing Chartered Accountant firms are engaged to
conduct concurrent audit in branches covering more than 80% of the
business during the financial year. Concurrently, the audit assesses
and evaluates the operational effectiveness of checks and balances on a
continuous basis with focus on regulatory guidelines and adherence to
internal policies, procedures and guidelines issued by the management
from time to time.
Secretarial Audit Report
As a measure of good corporate governance practice, the Board of
Directors of the Company appointed Mrs. Jayshree Joshi of M/s Jayshree
Dagli & Associates, Practicing Company Secretaries, Mumbai to conduct
Secretarial Audit of the Company. The Secretarial Audit Report for the
financial year ended March 31, 2014, forms part of the Annual Report.
The Secretarial Audit Report confirms that the Company has complied
with all the applicable provisions of the Companies Act, 1956, the
Rules made under that Act and applicable Provisions of the Companies
Act, 2013, Depositories Act, 1996 and the Regulations and Bye-Laws
framed under that Act, Equity and debt Listing Agreements with the
Stock Exchanges, Securities & Exchange Board of India (Employee Stock
Option Scheme & Employee Stock Purchase Scheme) Guidelines 1999 and all
the Regulations and Guidelines of SEBI as applicable to the Company,
including the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeover) Regulations, 2011, The Securities
and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008, the Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 1992, Foreign Exchange
Management Act, 1999 and relevant Rules, Regulations and Guidelines
issued by Reserve Bank of India, and the Memorandum & Articles of
Association of the Company.
Auditors
M/s. T. R. Chadha & Co., [Firm Registration No. 06711N] Chartered
Accountants together with M/s Rajendra Neeti & Associates, Chartered
Accountants, (Firm Registration No. 06543C), the Joint Statutory
Auditors of the Company, hold office till the conclusion of the ensuing
Annual General Meeting and are eligible for re-appointment.
Certificates have been received from them as per the provisions of
Section 139 of the Companies Act, 2013 and to the effect that their
re-appointment as Auditors of the Company, if made, would be within the
limits prescribed under Section 141(3)(g) of the Companies Act, 2013
and that they are not disqualified for reappointment as Joint Statutory
Auditors of the Company.
Based on the recommendation of the Audit Committee, the Board of
Directors in their meeting held on April 30, 2014 recommended the
appointment of M/s. T. R. Chadha & Co., and M/s. Rajendra Neeti &
Associates, Chartered Accountants, as the Joint Statutory Auditors of
the Company to hold office from the conclusion of this Annual General
Meeting until the conclusion of the 34th Annual General Meeting of the
Company, and that, the necessary resolution for appointing them as
Joint Statutory Auditors of the Company is being included in the notice
of the 30th Annual General Meeting for the approval of the Members of
the Company.
Notes to Accounts and Auditors Report
The notes to the accounts referred to in the Auditors Report are
self-explanatory and do not call for any further comments.
Directors'' Responsibility Statement
Your Directors would like to inform that the audited accounts
containing the Financial Statement for the year ended March 31, 2014
are in conformity with the requirements of the Companies Act, 1956 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 are audited by M/s. T. R. Chadha & Co.,
Chartered Accountants together with M/s. Rajendra Neeti & Associates,
Chartered Accountants, the Joint Statutory Auditors of the Company.
Pursuant to the provisions of Section 217 (2AA) of the Companies Act,
1956, your directors confirm that to the best of their knowledge and
belief :
1. In the preparation of accounts, the applicable accounting standards
and the requirements as set out under Schedule VI of the Companies Act,
1956 have been followed and there is no material departure from the
same.
2. The Directors have 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, 2014 and of the profit of the Company
for year ended on date.
3. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities.
4. The Directors have prepared the annual accounts on a going concern
basis.
Corporate Governance
Your Company adheres to the Corporate Governance norms and disclosures
as laid down under the Listing Agreements with the Stock Exchanges.
Pursuant to Clause 49 of the Listing Agreements, the following forms
part of this Annual Report:
(i) Chairman & Managing Director''s declaration regarding compliance of
Code of Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion & Analysis;
(iii) Report on the Corporate Governance;
(iv) Auditors'' Certificate confirming compliance with the conditions of
Corporate Governance as stipulated under Clause 49.
Future Outlook
The key macro-economic indicators for the last quarter of the financial
year 2013-14 showed encouraging results and indicate signs of further
recovery in 2014-15. The economic growth during 2014-15 is likely to
accelerate from current levels as the current logjam on the domestic
policy front is expected to clear post formation of the new Government
after the General Elections. The headline inflation measured by
Wholesale Price Index (WPI) and Consumer Price Index (CPI) is expected
to moderate further from the current levels thus providing space for
liberalising the monetary policy. On the global front, signs of
recovery are emerging and global growth is expected to improve to 3.6%
in 2014 from 2.9% in 2013 as per IMF estimates. Your Company does not
expect any pressure on the liquidity front.
Real estate experts are also optimistic about the revival of the
housing market in 2014-15, which has been sluggish over the past few
quarters. The real estate market in India is projected to post annual
revenues of USD 180 billion by the year 2020. The demand for housing
sector is anticipated to appreciate at a compound annual growth rate
(CAGR) of 22% during 2013-18.
As all key business enablers are currently showing favourable signs,
your Company is positive and expects another year of healthy growth in
2014-15.
Acknowledgements
Your Directors wish to place on record their gratitude to the National
Housing Bank, the Company''s Customers, Bankers, Members, Debenture
holders, Depositors and others for the continued support and faith
reposed in the Company. The Board also places on record its deep
appreciation for the dedication and commitment of the employees at all
levels. The Directors also would 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 co-operation.
For and on behalf of the Board
Place : Mumbai Kapil Wadhawan
Dated : April 30, 2014 Chairman & Managing Director
Mar 31, 2013
The Directors have pleasure in presenting the 29th Annual Report of
your Company and the Audited Financial Statements for the year ended
31st March, 2013.
Financial results
The Financial performance of the Company for the year ended 31st March,
2013 is summarized below : -
(Rs. in Crore)
2012-2013 2011-2012
Gross Income 4,140.36 2,469.68
Less : Interest 3,119.36 1,799.23
Overheads 401.86 267.37
Depreciation 8.46 4.72
Profit before Tax 610.68 398.36
Less : Provision for taxation 158.83 92.00
Profit after Tax 451.85 306.36
Add : Balance b/fd from the previous year 128.85 69.97
Addition on Amalgamation 153.60 -
Surplus available for appropriations 734.30 376.33
Appropriations
Transferred to Special Reserve under
Section 36(1)(viii) of the Income Tax Act, 1961 100.00 100.00
Transferred to General Reserve 200.00 100.00
Dividend for Earlier Year 0.08 0.08
Interim Dividend 23.42 -
Proposed Equity Dividend 38.47 40.89
Tax on Dividends 10.05 6.51
Balance carried over to Balance Sheet 362.28 128.85
Total 734.30 376.33
The figures of the financial year 2012-13 include the results of the
two erstwhile subsidiaries of the Company namely First Blue Home
Finance Limited (a Housing Finance Company) and DHFL Holdings Private
Limited, consequent upon their amalgamation with the Company.
Accordingly, the standalone figures of the previous year (2011-12) are
not comparable with the figures of financial year 2012-13.
Amalgamation Of Subsidiaries
In terms of the Scheme of Amalgamation ("the Scheme") of First Blue
Home Finance Limited (First Blue) and DHFL Holdings Private Limited
(DHFL Holdings) with the Company, as sanctioned by the Hon''ble High
Courts of Bombay and Delhi, which became effective from the closing
hours of 31st January, 2013, with Appointed Date as 1st April, 2011.
- First Blue and DHFL Holdings, both subsidiaries of the Company were
amalgamated with the Company and the entire business and whole of the
undertaking of the said transferor companies stood transferred to and
vested in the Company;
- The shareholders of erstwhile First Blue were issued and allotted
in aggregate 1,08,86,375 Equity Shares of Rs. 10/- each fully paid-up
in the Company, in the ratio of 10 equity shares of Rs. 10/- each fully
paid-up in the Company for every 97 equity shares of Rs. 10/- each
fully paid-up in First Blue, at a premium of Rs. 311.50 per equity
share;
- 21,99,45,206 equity shares of Rs. 10/- each representing, 67.56% of
the paid-up share capital of First Blue, held by DHFL Holdings stands
cancelled upon the Scheme becoming effective;
- The Equity Shares held by the Company in DHFL Holdings were
cancelled without any exchange of shares in the Company, as its entire
paid-up share capital was held by the Company;
- Consequent to the Scheme becoming effective, First Blue and DHFL
Holdings stood dissolved without winding up.
Performance
Your Company is engaged in the challenging exercise of strengthening
its brand across locations, products and market cycles. Your Company
showcased this capability in the challenging year 2012-13; even as
prevailing realty price lines were either sluggish or declined, your
Company continued to command realisations higher than the sectoral and
retrospective averages.
The Indian real estate market size is expected to touch US$ 180 billion
by year 2020. Recent growth in the Indian economy has stimulated demand
for land and developed real estate across the country. Demand for
residential, commercial and retail space is rising throughout India,
accompanied by increased demand for hotel accommodation and improved
infrastructure. Though a slackened trend is noticed at times, the
overall picture seems to be robust.
Global economic uncertainties have affected India''s economy,
including the real estate market. Macroeconomic indicators such as
fiscal deficit and interest rates are high, while the rupee is
depreciating. All this does not bode well for any industry, especially
real estate. High prices and interest rates have acted as dampeners.
Demand has been stagnating in a few cities, even as supply remains
high. Investors as well as end-users have been showing signs of
weariness. Repeated increases in interest rates have led to a decline
in sale of residential properties.
Flow of funds is a concern for developers. Real estate developers are
reeling under high debt and foreign direct investment inflows have
slowed.
The growth of the Indian economy is one of the fastest all over the
world. This factor directly influences the real-estate sector of India.
Major cities like Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore,
Pune and Kolkata are greatly affected by the growth of Indian economy.
Therefore despite a number of challenges, your Company has managed to
rake in substantial amount of revenues. The operating profit before
charging depreciation and tax stood at Rs. 619.14 crore and Profit
after Tax at Rs. 451.85 crore. The EPS improved to Rs. 38.47 as against
Rs. 28.97 of the previous year.
The Company''s core business is providing housing finance. It also has
associate companies which are involved in business verticals such as
insurance and property services which are intimately intertwined with
the core services meted out by the Company, thereby providing a gamut
of financial products and services to the customers approaching DHFL.
Lending Operations
The housing /other property loans sanctioned during the year ended 31st
March, 2013 were to the extent of Rs. 17,336.85 crore and disbursements
were Rs. 13,357.73 crore as against Rs. 15,997.40 crore and Rs.
11,306.57 crore (consolidated), respectively in the previous financial
year.
The cumulative loan disbursements of the Company since inception were
Rs. 42,162.73 crore.
Sale / assignment of Loans
During the year, your Company has sold/securitised a pool of housing
loans aggregating to Rs. 322.42 crore. Your Company will, however,
continue to collect the interest and EMI payments on these loans on
behalf of the acquirer of the loans and remit the same after retaining
its portion in terms of the individual agreements.
During the year, your Company has also securitised a pool of housing
loans comprising of 2,536 numbers of individual residential housing
loans amounting to Rs. 330.98 crore spread in several states and
transferred to a SPV Trust Series A1 Pass Through Certificate (PTCs)
rated as ICRA AAA (SO) [pronounced as ICRA Triple A] and subscribed by
various investors.
Instruments through which loans have been sold / assigned have been
rated by external credit rating agencies and carry a rating indicating
the highest degree of safety regarding timely servicing of financial
obligations.
Simultaneously, your Company subscribed an amount of Rs. 33.10 crore in
Series A2 Pass Through Certificate (PTCs) rated as ICRA A-(SO)
[pronounced as ICRA A minus]. The said PTCs are redeemable after the
extinguishment of Series A1 PTCs with aggregate tenure of 282 months.
Loan book
As at 31st March, 2013, the loan book stood at Rs. 33,901.72 crore as
against Rs. 25,468.22 crore (consolidated) in the previous year.
Dividend
Considering the excellent performance during the year under review,
your Directors have recommended a final dividend for the year ended
31st March, 2013 of Rs. 3.00 per equity share i.e. 30 per cent on
12,82,18,709 equity shares, including 1,08,86,375 equity shares of Rs.
10/- each fully paid-up, allotted to the shareholders of erstwhile
First Blue Home Finance Limited pursuant to the Scheme of Amalgamation.
This is in addition to the interim dividend of Rs. 2.00 per equity
share i.e. 20 per cent already paid on 3rd November, 2012. The total
dividend for the financial year 2012-13 will be Rs. 5.00 per equity
share i.e. 50 per cent as compared to Rs. 3.50 per equity share (35 per
cent) for the previous year ended 31st March, 2012. The final dividend
payable shall be subject to the approval of the shareholders at the
ensuing Annual General Meeting. The total outgo on account of dividend
(including dividend distribution tax) will be Rs. 72.02 crore as
against Rs. 47.48 crore in previous financial year.
The dividend on Equity Shares, if declared at the Meeting, will be paid
to those members, whose names shall appear on the Company''s Register
of Members on 15th July, 2013. In respect of the shares held in
dematerialized form, the dividend will be paid to members whose names
are furnished by National Securities Depository Limited and Central
Depository Services (India) Limited as beneficial owners as on that
date.
In terms of Listing Agreement, your Company has also paid dividend of
Rs. 8 lakh to the new shareholders on account of Final Dividend for the
year 2011-12, as those shares were allotted prior to the record date
for the dividend payment and after the date of previous year balance
sheet.
Equity shares that may be allotted under Employee Stock Option Schemes
before the date of the book closure for payment of dividend shall rank
pari passu with the existing shares and shall be entitled to receive
the dividend for the financial year 2012-13.
Transfer to Investor Education and Protection Fund (IEPF)
In terms of Section 205C of the Companies Act, 1956, the amount
(dividends / deposits, etc.) that remained unclaimed/ unpaid for more
than 7 years from the date it became first due for payment, shall be
transferred to IEPF.
The Company has been intimating the shareholders / depositors/
investors to lodge their claim for payments due, if any, from time to
time and such information is being mentioned in the Annual
Report every year. Such claims as and when received have been settled.
Despite constant and sincere efforts to pay the unclaimed dividend /
deposits / interest thereon to such shareholders / depositors /
investors, certain amount still remains unclaimed.
unclaimed dividend
As required under Section 205C of the Companies Act, 1956, during the
year, your Company has transferred unclaimed dividend of Rs. 6.29 lakh
for the financial year 2004-2005 and Rs. 5.79 lakh unclaimed Interim
Dividend for the financial year 2005-2006 to Investor Education and
Protection Fund (IEPF) established by the Central Government. As per
Section 205B of the Companies Act, 1956, no claim would lie against the
Company or the said fund after the transfer.
unclaimed deposits
During the year, in terms of Section 205C of the Companies Act, 1956,
an amount of Rs. 5 lakh was transferred to IEPF being unclaimed/unpaid
deposits along with interest thereon of erstwhile First Blue Home
Finance Ltd., that remained unclaimed/ unpaid for a period of 7 years
from the date it became first due for payment.
Pursuant to the provisions of Investor Education and Protection Fund
(Uploading of information regarding unpaid and unclaimed amounts lying
with companies) Rules, 2012, your Company has uploaded the details of
unpaid and unclaimed dividend/ fixed deposit amounts lying with the
Company for the last seven (7) financial years on the Company''s
website and has also filed the same with the Ministry of Corporate
Affairs. Shareholders/ Depositors who have not yet claimed the previous
year dividend/ fixed deposit amount / interest thereon may write to the
Company and/or to the Company''s Registrar and Share Transfer Agent.
Authorised Share Capital
In terms of the Scheme of Amalgamation ("the Scheme") sanctioned by
the Hon''ble High Courts of Bombay and Delhi, the Authorised Share
Capital of First Blue Home Finance Limited and DHFL Holdings Private
Limited, the Transferor Companies stands combined with that of your
Company. Consequently, the Authorised Share Capital of the Company
stands increased from Rs. 2,50,00,00,000 (divided into 17,50,00,000
Equity Shares of Rs. 10/- each and 7,50,00,000 Redeemable Non
Convertible Preference Shares of Rs. 10/- each) to Rs. 8,28,00,00,000
(divided into 74,80,00,000 Equity shares of Rs. 10/- each, 7,50,00,000
Redeemable Non Convertible Preference Shares of Rs. 10/- each and
5,00,000 Redeemable Non Convertible Preference Shares of Rs. 100/-
each.)
Paid-up Share Capital
During the year under review, your Company allotted equity shares as
per details given below:
(a) allotment of Equity Shares under Employee Stock Option Schemes
(ESOS)
During the year under review, your Company allotted in tranches
4,92,353 equity shares of Rs. 10/- each upon exercise of stock options
to the eligible employees of the Company under the Employee Stock
Option Scheme - 2008 and 2009.
(b) allotment of equity Shares pursuant to the sanctioned Scheme of
amalgamation
Pursuant to the order dated 27th July, 2012, passed by the Hon''ble
Bombay High Court and order dated 4th January, 2013, passed by
Hon''ble Delhi High Court, and in terms of Scheme of Amalgamation of
First Blue Home Finance Limited (First Blue) and DHFL Holding Private
Limited with the Company, the Committee of the Board of Directors at
its meeting held on Wednesday, 20th March, 2013, allotted 1,08,86,375
(One Crore Eight Lakh Eighty-Six Thousand Three Hundred and Seventy
Five) equity shares of Rs. 10/- each at a share premium of Rs. 311.50
per equity share to the eligible shareholders of First Blue in the
share exchange ratio of 10 (Ten) equity share of Rs. 10/- each of DHFL
for every 97 (Ninety Seven) equity share of Rs. 10/- each held in First
Blue.
In view of above, the issued, subscribed and paid-up equity share
capital of the Company stands increased to Rs. 128,21,87,090 divided
into 12,82,18,709 equity shares of face value of Rs. 10/- each.
Resource Mobilisation
Financial Year 2012-13 turned out to be a year of reckoning for most
countries. Indian economy however started showing revival during the
later half of the year. Keeping in mind the inflationary trend and to
boost the country''s economy Reserve Bank of India had reviewed its
monetary policy by reducing the key rates.
Total debt funds as on 31st March 2013 amounted to Rs. 32,058.39 crore,
as against Rs. 24,678.04 crore (consolidated) in previous year,
National Housing Bank (NHB) refinance constituted 7%, term loans from
banks and financial institutions 70% and 23% from money market
instruments. The Company''s average cost of borrowings for the year
was 10.63% as against 10.85% in the previous year.
Loans from Banks
As part of its liability management, your Company endeavors to
diversify its resource base in order to achieve an appropriate maturity
structure and minimize the weighted average cost of borrowed funds.
Commercial Banks continued their support to the Company''s asset
growth. As of 31st March, 2013, borrowings in the form of fresh term
loans from commercial banks and financial institutions were Rs.
8,530.13 crore taking the total term loan outstanding to Rs. 22,522.07
crore.
Refinance From National Housing Bank (NHB)
During the year, your Company has drawn refinance amounting to Rs.
787.00 crore under NHB''s Refinance Scheme to Housing Finance
Companies.
Subordinated debts
Subordinated Debts continue to be another source for funding the
operations of the Company. Subordinated Debts represents long term
source of funds for the Company and your Company raised Rs. 310.50
crore through the issue of long-term Unsecured Redeemable
Non-Convertible Subordinated Debentures. The subordinated debt was
assigned ''BWR AAA'' rating by Brickworks and ''CARE AA'' rating by
CARE.
As at 31st March, 2013, your Company''s outstanding subordinated debt
were Rs. 1,141.50 crore. The debt is subordinated to present and future
senior indebtedness of your Company. Based on the balance term to
maturity, as at 31st March, 2013, Rs. 1,064.58 crore of the book value
(discounted) of subordinated debt is considered as Tier II under the
guidelines issued by the National Housing Bank (NHB) for the purpose of
capital adequacy computation.
Non-Convertible Debentures (Ncds)
Your Company continues to issue fully Secured Redeemable
Non-Convertible Debentures on private placement basis. During the
year, your Company has raised Rs. 1,296.00 crore from banks and
financial institutions by way of issue of NCDs. The outstanding balance
of Debentures including interest accrued and due as on 31st March, 2013
amounts to Rs. 3,463.99 crore. The Company has appointed IDBI
Trusteeship Services Limited and GDA Trusteeship Limited to act as the
Debenture Trustees for the redeemable non-convertible debentures issued
by the Company to ensure that the interests of debenture holders are
well protected. The Company''s NCD issues have been listed on the
Wholesale Debt Market segment of the NSE. The Company''s NCDs have
been assigned the rating of "CARE AA " by CARE and "BWR AAA" by
Brickworks.
IDBI Trusteeship Services Limited acts as the Debenture Trustees for
the NCDs issued by erstwhile First Blue and the same are listed with
the Bombay Stock Exchange.
Perpetual debt Instrument (PDI)
During the year under review, your Company issued Perpetual Debt
Instruments ("PDI"). Your Company has raised the PDI of principal
amount of Rs. 25 crore. The outstanding as at 31st March, 2013, amounts
to Rs. 150.20 crore.
Commercial Paper
The Commercial Paper (CP) of your Company has been rated by Credit
Rating and Information Services of India Limited (CRISIL) and is
assigned the rating of CRISIL A1 (A One Plus). During the year, your
Company issued CPs to the extent of Rs. 4,214.63 crore in tranches and
placed them with investors'' at competitive rates of interest. As at
31st March, 2013, Commercial Papers outstanding amounts to Rs. 525.00
crore.
Deposits
During the year, your Company has achieved an overwhelming year on year
growth in deposits of 105%. The Outstanding Deposit as on 31st March,
2013 stood at Rs. 1,923.72 crore as compared to Rs. 938.81 crore in the
previous year. The spectacular growth has increased the Investor
footprints taking the Customer accounts to 1,20,472 Nos. which is year
on year growth of 89%.
During the year, number of measures have been taken that has resulted
in achieving the robust growth. Your Company has also focused on
deposit retention as the maturity profile was fairly large.
In brief, the initiatives taken by your Company includes the following:
(1) Involved the Strategic Corporate FD Team to focus on Retail
Liability Growth chasing the daily numbers. Due to this most of the
zones accomplished in raising their FD portfolio to a larger extent.
(2) Broker Interface has been organized at various key locations with
the objective of activating the intermediary channels as well as
popularizing Company''s FD schemes among the broking community.
(3) Placed few resources in key locations under the monitoring of
Regional / Location Sales Manager.
(4) Also ensured better staff participation, motivating their own
savings by rolling out Internal scheme for investing in DHFL FD
Schemes.
(5) Call Center''s services have been utilized to extend courtesy
calls to depositors reminding them of their deposit maturities well in
advance and providing them with interest updates.
(6) On the FD Operational initiatives, series of improvements are
carried out, few among them being :
a. Repayment of Maturity proceeds electronically, thus reducing turn
around time (TAT) and Cost.
b. New FD entry module for quick processing of FD Receipt to reduce
TAT.
c. Fortnightly, Brokerage Payments to the satisfaction of Broking
Community.
d. Periodical Interest servicing through ECS routes, to all depositors
who opted for the same.
e. Shifting the brokerage payment process to ECS mode enabling timely
credit to brokers'' bank account.
The FD portfolio has grown with well placed Fixed Deposit Schemes.
Fixed Deposit Schemes are packaged under the name "Aashray Deposit"
for periods ranging from 12 months to 84 months as per the regulatory
guidelines. Specific Deposit Schemes are offered focusing on serving
various investor segments such as trusts, women, individuals etc.
Schemes are also in operation for different tenures like 13 months, 40
months etc based on the customer''s preference.
As on 31st March 2013, 13,189 depositors had not claimed the deposits
amounting to Rs. 18.12 crore. Depositors have been intimated regarding
the maturity of their Deposits, with a request to either renew or claim
their matured deposits. Fixed Deposits accepted by the Company are
secured appropriately to the extent of floating charge on approved
securities and bank deposits created by way of Deed of Trust, as per
guidelines issued by NHB.
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 financial statement for the year ended 31st March, 2013.
Credit rating
The Company''s borrowings enjoy the following credit ratings:
Nature of Borrowing Rating / Outlook
CARE Brickworks ICRA CRISIL
Short-Term Debt /
Commercial Paper - - A1 CRISIL A1
Fixed Deposits CARE AA
(FD) BWR FAAA - -
Subordinated Debt CARE AA BWR AAA - -
Non-Convertible
Debentures CARE AA BWR AAA - -
Perpetual Debenture CARE AA- BWR AA - -
Long-term Bank Loans CARE AA - - -
Structured Obligations - - ICRA
AAA(SO) -
Capital Adequacy
As required under NHB Directions, your Company is presently required to
maintain a minimum capital adequacy of 12%. In addition, the NHB
Directions also require that your Company transfers minimum 20% of its
annual profits to a reserve fund. The following table sets out the
capital adequacy ratios of the Company as at March 31 2011, 2012 and
2013.
Particulars As on 31st March
2013 2012 2011
Capital Adequacy Ratio 16.52% 17.42% 19.39%
Your Company''s Capital Adequacy Ratio was at 16.52% as on 31st March,
2013, which we believe provides an adequate cushion to withstand
business risks and is above the minimum requirement of 12% stipulated
by the NHB.
Non-Performing Assets And Provisions For Contingency
Your Company adhered to the prudential guidelines for Non Performing
Assets (NPAs), issued by the National Housing Bank (NHB) under its
Directions of 2010, as amended from time to time. As per the prudential
norms, the income on such NPAs is not to be recognised.
As per the prudential norms prescribed by the NHB, the Company has made
provision for contingencies on standard as well as non-performing
housing loans and property loans. The Company has also made additional
provision to meet unforeseen contingencies.
The amount of Gross Non-Performing Assets (NPA) as on 31st March, 2013
was Rs. 239.32 crore, which is equivalent to 0.71% of the loan
portfolio of the Company, as against Rs. 146.49 crore i.e. 0.76% of the
loan portfolio as on 31st March, 2012. The net NPA as on 31st March
2013 has decreased to Rs. 155.97 crore i.e. 0.46% of the loan portfolio
vis-a-vis Rs. 99.95 crore i.e. 0.52% of the loan portfolio as on 31st
March, 2012. The total cumulative provision towards loan assets as on
31st March, 2013 is Rs. 262.67 crore as against Rs. 155.39 crore in the
previous year. During the year, the Company has written off Rs. 4.94
crore of loans as against Rs. 2.36 crore during the previous year.
In order to prevent frauds in loan cases involving multiple lending
from different Banks / Housing Finance Companies, the Government of
India has set up the Central Registry of Securitization Asset
Reconstruction and Security Interest of India (CERSAI) under Section 20
of the SARFAESI Act, 2002, to have a central database of all mortgages
created by lending institutions. The object of this registry is to
compile and maintain data relating to all transactions secured by
mortgages. Accordingly, your Company is registered with CERSAI and
submitted the data in respect of loans, from time to time.
The Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI) has proved to be
a useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
defaulters. The Company has acquired certain assets under SARFAESI
which are retained for the purpose of sale under the rules and
regulations of SARFAESI involving Rs. 16.27 crore.
Credit risk Guarantee Fund Trust for Low Income housing (CRGFTLIH)
The Government of India has set up a Credit Risk Guarantee Fund Trust
for Low Income Housing to address the housing needs of Economically
Weaker Sections (EWS)/Low Income Group (LIG) in urban areas through
sustainable credit mechanisms and improve home ownership and inclusive
housing in the country.
Your Company has entered into an agreement with the "Credit Risk
Guarantee Fund Trust for Low Income Housing". The Fund will provide
protection to the lenders against default on housing loans from the
borrowers in the Economically Weaker Sections/ Low Income Group. It
will also act as a credit risk mitigate for the lenders and will help
in capital relief with lower risk weight on these loans. The Fund Trust
will facilitate flow of credit to the low-income households in the EWS
/ LIG category from the formal financial sector.
Investments
The Investment Committee constituted by the Board of Directors is
responsible for approving investments in line with limits as set out by
the Board. The decisions to buy and sell upto the approved limit
delegated by the Board are taken by the Chairman and 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 NHB.
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 and short term deposits with banks. During
the year, your Company earned Rs. 50.96 crore by way of Income from
Mutual funds / financial derivatives and Rs. 33.93 crore by way of
interest on deposits placed with banks. At the end of the year, your
Company maintained Rs. 321.28 crore by way of deposits with banks.
As per NHB guidelines, HFCs 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 31st March, 2013,
your company has invested Rs. 103.81 crore (book value-gross) in
approved securities comprising of government securities, government
guaranteed bonds and by way of Bank Deposits for Rs. 106.34 crore. It
is maintained within the limits prescribed by NHB.
Your Company has acquired 48.50% of the total paid up equity share
capital of Avanse Financial Services Private Limited (Avanse). Avanse
is a new age Non-Banking Finance Company (NBFC) registered with the
Reserve Bank of India, which is having focus towards providing
education loans for higher studies in India and abroad. Along with
dominant courses like engineering, business management, Avanse will
also provide students the opportunity to explore new age courses like
Aquaculture, Photo Journalism, courses in Music & Culture and many
more.
Subsidiaries & associate Companies
Consequent upon the amalgamation of First Blue Home Finance Limited
[First Blue] and DHFL Holdings Private Limited [DHFL Holdings] with the
Company, First Blue and DHFL Holdings, ceased to be subsidiaries of the
Company.
During the year under review, your Company disinvested its equity
shareholdings in Aadhar Housing Finance Private Limited bringing it
down to less than 15%. Disinvestments were also made in First Blue
Financial Consultants Ltd. a wholly owned subsidiary of erstwhile First
Blue Home Finance Limited to the existing promoters / promoter group of
your Company.
However, the said Companies shall continue to be Associate/ Group
Companies of your Company. As on date of this report, your Company does
not have any subsidiary company and hence no disclosure is required to
be made pursuant to Section 212 of the Companies Act, 1956.
Information Technology and Communications
During the financial year 2012-13, IT department has undertaken various
projects, few of which are as under:
- Rollout of Customer Portal where customers can online access their
account details. They can print their provisional income tax
certificate and can also view their repayment schedule etc.
- An agreement was signed up with IBM to setup a Disaster Recovery
Site which will be implemented soon. The Company plans to run
applications from both the data centers on an Active - Passive
application architecture for the core applications required to run the
business.
- The Company''s IT function is also in the process of revamping the
existing application along with integration of First Blue.
Other initiatives includes, investment in tools to improve the
experience of the end users and in tools for monitoring of the end
points along with Asset Management and Patch Management, upgrading the
WAN bandwidth at selective locations to provide better connectivity to
the primary datacenter at Bangalore.
human resources
The ever changing demands of the evolving economy necessitate companies
to appreciate the importance of intangible assets. Principal among
these is human intellect, human energy and human inventiveness.
Today''s organization require a more sophisticated approach to
managing and developing human capital, which gives the company the
desired competitive advantage for survival in the long run.
During the year, the integration of erstwhile First Blue Home Finance
Ltd. into the Company was a major exercise which was successfully
completed. The integration process focused both on business as well as
cultural integration.
The combined work force strength of your Company as on 31st March, 2013
was 1736. The total work force cost during the year was Rs. 140.69
crore for the merged entity as compared to Rs. 87.76 crore (standalone
entity cost) in the previous year. This is mainly due to addition of
merged entity work cost and the increase in work force to meet the
requirements on account of significant expansion in terms of geography
as well as in business volumes and the salary revisions effected during
the year. Few additional positions are added at the corporate level for
meeting business requirements and to give greater focus to functions
like Credit Appraisal and Operations.
Learning & development (L&D)
In the year 2012-13, Learning and Development team persevered to
deliver effective training sessions and ensured that the employees move
along the Company''s vision. The Management acknowledged the strength
and importance of the division; hence a separate vertical was designed
with a vision to create a paradigm shift in its role and perception
from "being limited to imparting training" to "catalysts of
improvements".
With an approach to impart trainings at various levels; the team
divided each department into different levels according to their ranks
and vintage. The major focus of training (L&D) department is :
- To access and analyze the needs of trainings in the Company.
- To design and develop training modules for training to be conducted
for the new joiners, existing agents and managers for improved
performance and efficiency.
- To provide feedback and coaching to trainees & trainers alike.
- To prepare training reports including training feedback
consolidation and class observations to the Management.
Highlights For 2012-13
With increased focus on training & development of employees, 13 new
internal programs were introduced during the year on various new areas
such as competency based programs, problem solving, art of selling,
communication, customer relationship management, etc. This included the
participation from all the departments.
Started with the new methodology for product trainings by designing the
product session in a manner which included in depth knowledge on -
Policy / Target Segment / Sourcing Avenues/ Marketing Activities
required.
Outsourced Soft skills training sessions were conducted Pan India for
employees. The Company also encourages its managers to attend seminar
and conferences conducted by reputed institutions and the regulator-
NHB, related to their job to keep themselves abreast of latest
developments in their fields. Trainings on KYC and AML policies were
also imparted at all levels.
Trainings were conducted on monthly basis in all branches covering the
entire strength of the branch. All the trainings were followed by
trainee''s assessment.
Particulars of Employees
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed thereunder, the names and other
particulars of employees are set out in the annexure to the
Directors'' Report. In terms of the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956 the Director Report is being
sent to all the shareholders of the Company excluding the annexure. Any
shareholder interested in obtaining a copy of the said annexure may
write to the Company.
Employees Stock Option Scheme (ESOS)
Employees Stock Option Scheme (ESOS) namely ESOS-2008 and ESOS-2009
Plan I & ESOS-2009 Plan II were approved and implemented by the Company
in accordance with the Securities and Exchange Board of India (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines,
1999 (''''the SEBI Guidelines'''').
The particulars of options granted under the said plans are as under :
Particulars ESOS-2008 ESOS-2009 ESOS-2009
Plan I PlanII
Options granted under the 14,22,590 12,75,000 12,34,670
schemes
Options exercised up to 9,90,626 6,77,534 -
31.03.2013
Options Lapsed 2,50,430 2,11,605 1,69,810
upto 31.03.2013
Options outstanding at the 1,81,534 3,85,861 10,64,860
end of the year
Options unvested
at the end of the year 1,53,376 - 8,64,269
Options exercisable at the 28,158 3,85,861 2,00,591
end of the year
Conservation of Energy, Technology Absorption and Foreign Exchange
Earning and Outgo
The particulars regarding foreign exchange earnings and expenditure
appear at Note No. 38 in the Notes forming part of the financial
statement for the year ended 31st March, 2013.
Since the Company is not engaged in any manufacturing activity, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 are not applicable.
Insurance Coverage to borrowers
Your Company is a Group Administrator (Master Policy Holder) of ''Home
Assure'' a life insurance mortgage reducing term assurance product
from ICICI Prudential Life Insurance Co. Ltd, whereby the borrowers are
insured for the outstanding loan amount in the event of occurrence of
death during the loan tenure.
In addition your Company also offered ''Home Safe Plus'' a general
insurance product from ICICI Lombard General Insurance Co. Ltd to the
borrowers availing loan against property to insure them against
accidental death, property insurance, critical illness and loss of job
which is covered upto 3 EMI''s.
The primary objective is to insure our loan portfolio from default due
to unforeseen events with our borrowers. Your Company has insured 94%
of all the new customer acquisitions and 72% of the total loan
portfolio acquired in FY 2012-13.
Insurance of Company''s Property
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate event of such incidents.
The employees of the Company are covered under the mediclaim facility
against hospitalization.
Directors'' And Officers Liability Insurance Policy
This policy covers the Directors'' and Officers of the Company against
the risk of third party actions arising out of their actions /
directions which may have resulted in financial loss to any third
party. The Company has appropriately insured itself to mitigate against
such risk from any third party.
National Housing Bank (NHB) Guidelines
The Company has complied with the provisions of Housing Finance
Companies (NHB) Directions, 2010 as prescribed by NHB and has been
following the various Circulars, Notifications and Guidelines issued by
National Housing Bank (NHB) from time to time. The Circulars and the
Notifications issued by NHB are also placed before the Audit Committee
/ Board at regular intervals to update Board members on the same.
RISK MANAGEMENT
As a responsible lender, DHFL is having robust Risk Management in place
and manages Credit, Market and Operational Risks effectively.
The credit risk is managed both at portfolio level i.e.
diversification, risk based pricing, credit parameters as per risk
appetite and ongoing portfolio analysis on various parameters for
better and informed decision making, and at credit processing and
delivery level by using credit prudence and due diligence on the
documents submitted by the customers. The Credit Risk is also being
managed effectively at transaction level by using services of in-house
professionals for valuations and legal vetting.
Asset Liability Management Committee takes care of market risk
emanating on account of interest rate fluctuations in the market,
liquidity and funding risks. Risk relating to loan delivery and life
cycle management (Operation risk) is taken care of by the Operations
department.
To have a focused and comprehensive approach on Risk Management, a
dedicated function headed by a Risk Management professional has also
been established.
Asset Liability Management Committee (ALCO)
The Asset Liability Management Committee (ALCO), functioning under the
supervision of the Board of Directors, lays down policies and
quantitative limits that involve assessment of various types of risks
and shifts in assets and liabilities to manage such risks. ALCO ensures
that the liquidity and interest-rate risks are contained within the
limits laid down by the Board. Being dynamic, the risk management
framework will continue to evolve in line with the emerging risk
perceptions. The Company has also implemented NHB''s Asset Liability
Management Guidelines.
Know Your Customer (KYC) norms
Your Company has Board approved KYC & AML Policy in place. The said
Policy is in the line of NHB guidelines. The Company furnishes to
Financial Intelligence Unit (FIU), in the electronic mode, information
of all cash transactions of the value of more than rupees ten lakh or
its equivalent in foreign currency and suspicious transactions whether
or not made in cash, in terms of said KYC & AML Policy.
Codes and Standards Fair Practice Code
Your Company has in place a Fair Practice Code (FPC), which includes
guidelines on appropriate staff conduct when dealing with customers and
on the organisation''s policies vis-a-vis client protection. The FPC
captures the spirit of the NHB''s guidelines on fair practices for
Housing Finance Companies.
Code of Conduct
Your Company has adopted a Code of Conduct for its Board Members and
Senior Management personnel. The code of conduct has also been posted
on the official website of the Company.
The declaration by the Chairman & Managing Director of the Company
regarding compliance with the Code of Conduct for Board Members and
Senior Management is annexed with the Corporate Governance Report.
Code for Prevention of Insider Trading Practices
Your Company has formulated and adopted a Code for Prevention of
Insider Trading Practices in accordance with the model code of conduct
as prescribed under the SEBI (Prohibition of Insider Trading)
Regulations, 1992, as amended. The code is applicable to all directors,
senior employees and their dependents. The said persons are restricted
from dealing in the securities of the Company during the ''restricted
trading periods'' notified by the Company, from time to time.
Secretarial audit report
As a measure of good corporate governance practice, the Board of
Directors of the Company appointed Shri Mohd. Aabid of M/s Aabid & Co.,
Practicing Company Secretaries, to conduct
Secretarial Audit of the Company. The Secretarial Audit Report for the
financial year ended 31st March, 2013, forms part of the Annual Report.
The Secretarial Audit Report confirms that the Company has complied
with all the applicable provisions of the Companies Act, 1956,
Depositories Act, 1996, Listing Agreements with the Stock Exchanges,
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 and all the
Regulations and Guidelines of SEBI as applicable to the Company,
including the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeovers) Regulations, 2011 and the
Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 1992.
Listing of Shares of the Company
The Equity Shares of your Company continue to remain listed on Bombay
Stock Exchange Limited and the National Stock Exchange of India
Limited.
The Company has paid the listing fees as payable to the Bombay Stock
Exchange Limited and the National Stock Exchange of India Limited for
the financial year 2012-13 on time.
Marketing
business generated through Call centre
The call centre played an important role this year in business
generation and assigned leads received via all direct channels post
screening to 110 branches across all locations. Approximately Rs. 2,800
crore worth of leads were generated by the call centre in the year, out
of these, 5% leads were converted and disbursement for the same
amounted to Rs. 171.79 crore. This conversion contributed to 3% of the
overall home loan business generated in FY 2012-13.
Branch Network
Your Company has a strong marketing and distribution network. The
acquisition of First Blue Home Finance Ltd. has substantially enhanced
Company''s branch network and strengthened its presence across India.
The Company''s branch network has increased to 166 as at 31st March,
2013 from 122 branches in the previous year.
Additionally, your Company has international representative offices
located in London and Dubai to cater to the needs of non- resident
Indians.
The Company''s strong network coverage is designed to provide
increased penetration to cater to the evolving needs of the existing
customer base and tapping a growing potential customer base throughout
India.
On the International Women''s Day, your Company has opened Company''s
first ''Mahila Branch'' at Vasai - Maharashtra. The new branch is
managed by women staff only.
Alliances & Business Tie-Up
Your Company has entered into strategic housing loan distribution and
syndication arrangements with public and private sector banks. The
present allies are Punjab & Sind Bank for Northern India, United Bank
of India for Eastern India, Central Bank of India for Central India and
Yes Bank Limited for Pan India. This unique arrangement provides your
Company a wider reach and access to the Banks'' network, where both
partners are set to gain. The additional points of sales through ally
banks'' strong network coverage are aimed at providing increased
footprint to your Company for catering to the evolving needs of our
existing customer base and tapping a growing potential customer base
across India. The success of one alliance led to another and today your
Company has emerged as a major player in all the locations of alliance
and has more than Rs. 1100 crore of assets generated through these
alliances.
Your Company has taken pioneering steps during the year towards further
improving its innovative business models under syndication and novation
route and implemented the same with Yes Bank Ltd. resulting in business
benefits including fee income to your Company. Your Company also
entered into business generation arrangement with FedBank Financial
Services Ltd. especially for increasing presence among LMI clientele.
The alliance arrangements not only reflect acknowledgment of your
Company''s business models and standing in the financial circles, but
also add significantly to the financials of the organization. The
initiatives are being lauded in the Banking and Finance Industry and
your Company expects to expand the existing alliances geographically
and also enter into some new alliances.
Branding
Last year saw your Company grow in brand value. During the year, the
Company remained resolute in building the brand for the long term and
will continue to invest in the brand to make it the top brand in the
category.
Brand Campaign
The campaign was well planned and strategically timed this year to
create a top of mind recall just before the IPL season 6 starting on
3rd April, 2013. The campaign went on air from 12th March, 2013 and
continued for a period of three weeks till 2nd April, 2013. A healthy
channel mix of General Entertainment channels, news channels and movie
channels were complimented with a bouquet of regional channels in the
same genres. The campaign garnered an overall ''Gross Rating Point''
(GRP^) of 554 against a target of 500 with a reach of 69% at average
''Opportunity To See'' (OTS#) of 8.0.
Sustainance Campaign
A well designed Print media plan sustaining for three weeks starting
10th December, 2012 carried a targeted Home Loan communication to
increase product awareness. The campaign reached out across 14
publications, in 9 languages. The campaign resulted in 128% increase in
enquiries and a total of 5737 enquiries were generated through the
campaign, which were worth Rs. 225 crore.
Retail Participation: The year saw a focus on retail presence in
various consumer exhibitions and trade fairs across regions. Your
company participated in 29 such events which resulted in 1.36 lac
leads.
business Associate Meets: In the year a clear focus was given to
strengthen partnerships. 42 business associate meets were organised
across all zones, where partnerships were strengthened and long term
relationships nurtured.
Sports Sponsorship: The association with Mumbai Indian from last year
was taken forth this year and a grand meet and greet event was
organised which saw the presence of the Mumbai Indian players at the
event. Employees showed great enthusiasm in meeting the players. An
overwhelming response from the customers was received for various
contests on various mediums, through which a select few got a chance to
meet their idols. The event also saw the children from the Mumbai
Mobile Creches (NGO for children of construction workers) meet their
favourite players.
This year, your Company entered into the second year of association
with the Mumbai Indians franchise of IPL as an Associate sponsor and
the Official Home Loan Partner. The association is being leveraged to
increase awareness for the brand and increase the brand equity by
association. The same is being utilised to create engagement with the
audience through the social media and digital platform. Various contest
and opportunities have been created to increase the buzz in the digital
space for customers and employees.
Online: Adapting to the changing scenario, this year your Company went
in whole heartedly to gain prominence in the digital space. The Twitter
handle was launched and currently has approx 500 followers. The
Facebook page also has a strong fan following at approx 2600 which is
expected to go further up leveraging on the MI association. The website
continues to attract traffic and serves as first port of call. The
online queries generated a business of approx Rs. 1897 crore Home loan
in disbursements and Rs. 22 crore in deposits.
Awards and Recognition
This year saw a list of award being bestowed upon your company by
various bodies that recognised the efforts and commitment of the
Company towards its vision.
The Greatest Corporate Leaders of India Award for the year 2012-13 was
awarded to your company by the Leadership Awards in Financial Services.
Your Company was awarded to be amongst the Most Trusted Financial
Brands in India by the Brand Trust Report for the year 2012-13.
Your Company''s Marketing Head was awarded the Super Achievers Awards
by the 11th Indira Super Achievers awards for Professional Executives.
Your Company''s Head, Human Resources won the HR warrior Awards Making
Difference 2012.
Your Company has won the Marketer of the Year by the Realty Plus
Excellence Awards for the year 2012.
Brand Values
The year saw a focus on press relation and re-inforcing the Company
brand values and maintaining a positive reputation/ image. A focus on
increasing the share of voice in industry, created a greater mind
recall for brand DHFL, Aadhar & Avanse. Various product and events
were promoted, which included the "DHFL All Women Branch", "interest
rate updates", "Aadhar Awas Mela" and many more. "Avanse Education
Loans" was launched through a press event. The efforts resulted in
603 articles across genres and generated a value of Rs. 6 crore worth
of media.
Corporate Social responsibilities (CSR)
The Ministry of Corporate Affairs in July 2011 came out with the
"National Voluntary Guidelines on Social, Environmental and Economic
Responsibilities of Business" and SEBI also made amendment to this
effect in the listing agreement.
During the year under review, your Company has adopted Corporate Social
Responsibility (CSR) Policy with an aim to ensure that the Company as a
socially responsible corporate entity contributes to the society at
large. In order to have a focused approach, the company has created a
separate CSR unit to undertake the CSR programmes of the Company.
Further, to oversee the activities of CSR, a CSR Committee of Directors
has also been constituted.
Your Company has been established with a vision of enabling home
ownership amongst the lower and middle income segment in 1984. Since
then, your Company has been taking this vision forward and has been
enabling financial access to a segment perceived as ''risk''. Your
Company, today boasts of a successful ''business model'' based on
''financial inclusion. Counseling the ''ignorant'' weaker sections
on the need of creating and maintaining a strong credit history,
banking responsibly and managing risks has been the core of your
Company''s business.
In FY 2012-13, your Company disbursed 21,132 loans under the ''Golden
Jubilee Rural Housing Scheme'' of the Government of India. Your
company has over-performed the Government Target by 138%.
Blood Donation
To once again commemorate our heroes on Independence Day, DHFL
organised a Blood donation camp on August 15th, 2012 across 10
locations which saw a tremendous participation and 264 units of blood
were collected on the day from the DHFL Family.
Joy Of Sharing
DHFL partnered with Mumbai Mobile Creches, an NGO working for the
upliftment of children of construction workers. DHFL Employees
volunteered wholeheartedly and spent time with children doing various
activities including painting, singing, dancing, storytelling and book
reading over 24 sessions. This resulted in a lot of knowledge transfer
and was an enriching experience for all.
Joy of giving
In the spirit of giving, employees came forward and donated items like
clothes, toys, rain wear, bed sheets etc towards the Donation Drive.
The donated items were distributed in Vangani village. Employees came
forward and whole heartedly supported this noble cause. The initiative
was made possible with our NGO partner, Umang Foundation.
Mumbai Marathon
Your Company participated in Mumbai Marathon - on 20th January, 2013
for supporting the cause of Mumbai Mobile Creches, a NGO for children
of construction workers.
Go green Initiatives
During the year 2012, we took an initiative with an aim of going green
and minimizing our impact on the environment. Thus similar to the
previous year, this year too we shall send the annual reports for the
financial year 2012-2013 in the electronic format to the shareholders
who have registered their e-mail ID with their Depository Participant.
Directors
Your Directors express their profound grief on the sad demise of Shri
R. S. Hugar, an Independent Director of the Company who passed away on
30th January, 2013. Shri R. S. Hugar has been on the Board of the
Company as an Independent Director since 31st July, 2002. He was also
Chairman of the Audit Committee of the Board. The Board pays glowing
tribute to him and puts on record highest appreciation of his
association with the Company as a highly respected Director.
During the period under review Dr. P. S. Pasricha resigned from
Directorship of the Company on 25th February, 2013. The Board places on
record its appreciation for the valuable contribution made by him
during his tenure as a Director of the Company.
Shri M. Venugopalan has been appointed as Additional Director on 25th
February, 2013. Shri M. Venugopalan is an Independent Director. As per
the provisions of Section 260 of the Act, he holds office up to the
date of the forthcoming Annual General Meeting (AGM) of the Company.
The Company has received notice under Section 257 of the Act, proposing
his appointment as a Director of the Company. Resolution seeking
approval of the members for the appointment of Shri M. Venugopalan as a
Director of the Company has been incorporated in the Notice of the
forthcoming Annual General Meeting.
In accordance with the provisions of the Companies Act, 1956 read with
the Article 158 of the Articles of Association of the Company, Shri R.
P. Khosla and Shri G. P. Kohli, Directors of your Company retire by
rotation and being eligible; offer themselves for re-appointment at the
ensuing Annual General Meeting. Necessary resolutions for the
re-appointment of the aforesaid directors have been included in the
notice of the ensuing Annual General Meeting.
Brief resume of the Directors proposed to be appointed / re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and Membership / Chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges in India, are provided in the annexure to the
Notice of the Twenty-Ninth Annual General Meeting being sent to the
members along with the Annual Report. All the directors of the Company
have confirmed that they are not disqualified for being appointed/
reappointed as directors in term of Section 274(1)(g) of the Companies
Act, 1956.
Internal audit
Your Company has a well equipped internal audit department carrying out
a regular independent evaluation of various activities undertaken by
the Company through its Branches, Zonal Offices and Corporate Office.
The Internal Audit Department headed by a senior management personnel
with reporting lines to the Audit Committee of the Board and dotted
line reporting to the Chairman and Managing Director. The audit
function maintains its independence and objectivity while carrying out
assignments. It evaluates on a continuous basis, the adequacy and
effectiveness of internal control mechanism, adherence to policies,
procedures as well as regulatory and legal requirements. The function
also proactively recommends improvement in operational processes and
suggests streamlining of controls against various risks. The Audit
Committee of the Board reviews the performance of the internal audit on
continuous basis, gives direction to its functionaries and reviews
effectiveness of internal control systems.
Auditors
M/s. B M Chaturvedi & Co, [Firm Registration No.114317W] Chartered
Accountants, who are the Statutory Auditors of the Company hold office,
in accordance with the provisions of the Companies Act, 1956 upto the
conclusion of the ensuing Annual General Meeting of the Company. From
the regulatory perspective, M/s. B M Chaturvedi & Co., have not offered
themselves for re-appointment as the Statutory Auditors of the Company
for the financial year 2013 - 2014. The Board places on record its
appreciation of the services rendered by M/s. B.M. Chaturvedi & Co.,
Chartered Accountants, the retiring Statutory Auditors of the Company.
Your directors are pleased to inform you that, pursuant to the
amalgamation of erstwhile First Blue Home Finance Limited with the
Company, the book size of the Company has increased tremendously.
Further the operations of the Company have also been growing steadily
over the past few years, this has resulted in substantial increase in
the accounting and financial transactions. In response to this
increased volume and to ensure all accounting compliances and on the
basis of the recommendation made by the Audit Committee, the Board of
Directors has at its meeting held on 7th May, 2013 recommended the
appointment of M/s. T. R. Chadha & Co., [Firm Registration No. 006711N]
Chartered Accountants together with M/s. Rajendra Neeti & Associates,
[Firm Registration No. 006543C] Chartered Accountants as Joint
Statutory Auditors of the Company for the financial year 2013-14 in
place of the retiring auditors of the Company.
M/s. T. R. Chadha & Co., [Firm Registration No. 006711N] Chartered
Accountants and M/s. Rajendra Neeti & Associates, [Firm Registration
No. 006543C] Chartered Accountants have expressed their willingness to
act as statutory auditors of the Company for the financial year 2013-14
and have further confirmed that the said appointment, if made, shall be
within the prescribed limits under Section 224 (1B) of the Companies
Act, 1956 and that they are not disqualified for appointment within the
meaning of Section 226 of the said Act.
The notice convening the 29th Annual General Meeting contains the
resolution for their appointment. Members are requested to consider
their appointment as Joint Statutory Auditors of your Company to hold
office from the conclusion of ensuing Annual General Meeting to the
conclusion of next Annual General Meeting on remuneration to be decided
by the Board of Directors based on the recommendation of the Audit
Committee of the Board.
notes to Accounts and Auditors Report
The notes to the accounts referred to in Auditors Report are self-
explanatory and therefore do not call for any further comments.
Directors'' Responsibility Statement
Your Directors would like to inform that the audited accounts
containing the Financial Statement for the year ended 31st March, 2013
are in conformity with the requirements of the Companies Act, 1956 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 are audited by the Statutory Auditors, M/s.
B. M. Chaturvedi & Co., Chartered Accountants, Mumbai.
In accordance with the provisions of section 217 (2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
directors state that:
(i) in the preparation of accounts, the applicable accounting standards
have been followed;
(ii) they have 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 31st March, 2013 and of the profit of the Company for
year ended on date;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities and
(iv) they have prepared the annual accounts on a going concern basis.
Corporate governance
Your Company has complied with the provisions of Corporate Governance
as under the Listing Agreement of the Stock Exchanges, where the
Company''s shares are listed. Pursuant to Clause 49 of the Listing
Agreement with the Stock Exchanges, the following forms part of this
Annual Report :
(i) Chairman & Managing Director''s declaration regarding compliance
of Code of Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion & Analysis
(iii) Report on the Corporate Governance;
(iv) Auditors'' Certificate regarding compliance of conditions of
Corporate Governance.
Future Outlook
Your Company is positive in the outlook for the housing market in
2013-14 compared to the suppressed demand in 2012-13.
In 2013-14, the market is expected to grow much faster mainly on
account of softening interest rates. There is a clear indication of
falling interest rates. Going forward, the policy environment will
support more growth and for which, lower interest rate will definitely
be an important factor.
Secondly, there is huge unsold inventory in the market. With increased
demand, the absorption (of demand) can also be better. Your Company
envisages better outlook for housing finance market in FY 2013-14.
Above factors will lead to a rise in credit demand for housing. The
liquidity conditions of your Company have remained comfortable during
the year. Further your Company has tied up with International Finance
Corporation (IFC) for External Commercial Borrowings (ECBs) up to US$
70 million and $ 15 million (senior loan from IFC acting as
implementing entity of the Canada Climate Change Program, "CCCP")
respectively. The amount to be raised shall be utilized for onward
lending in the segment of low cost affordable housing project and for
creating a portfolio of eligible green mortgages in the affordable
housing segment respectively. ECBs shall be availed by the Company
subject to the necessary approvals.
Your Company does not expect any pressure on the liquidity front. This
is because liquidity conditions in the banking system will continue to
remain comfortable. A healthy demand for home loan coupled with
comfortable liquidity conditions will lead to a rise in disbursement.
Acknowledgements
Your Directors wish to place on record their gratitude to the National
Housing Bank, the Company''s Customers, Bankers, Shareholders,
Debentureholders, Depositors and others for their assistance and
co-operation and who have helped the Company in its endeavour. The
Board also places on record its deep appreciation for the excellent
support received from the employees at all levels during the year. The
Directors would also like to thank the Bombay Stock Exchange, the
National Stock Exchange, NSDL, CDSL and the Credit Rating Agencies for
their co-operation.
For and on behalf of the Board
Place : Mumbai Kapil Wadhawan
Dated : 7th May, 2013 Chairman & Managing Director
Mar 31, 2012
Dear Shareholders,
The Directors are pleased to present the Twenty-Eighth Annual Report
on the business and operations of your Company together with the
Audited Statement of Accounts for the year ended 31st March, 2012.
FINANCIAL RESULTS
The Financial performance of the Company for year ended 31st March,
2012 is summarized below:-
(Rs. in Crore)
2011-2012 2010-2011
Gross Income 2,469.68 1,451.24
Less : Interest 1,799.23 973.13
Overheads 267.37 168.33
Depreciation 4.72 3.73
Profit before Tax & Exceptional Items 398.36 306.05
Add : Exceptional Items 0.00 35.43
Profit before Tax 398.36 341.48
Less : Provision for taxation 92.00 76.35
Profit after tax 306.36 265.13
Add : Balance b/d from the previous year 69.96 30.35
Surplus available for appropriations 376.32 295.48
Appropriations
Transferred to Special Reserve under
Section 36(1)(viii) of the Income
Tax Act, 1961 100.00 40.00
Transferred to General Reserve 100.00 100.00
Transfer to Contingency Reserve - 35.00
Dividend on Preference Shares - 0.02
Dividend for Earlier Year 0.08 6.59
Proposed Equity Dividend 40.89 36.57
Tax on proposed Dividend 6.51 7.34
Balance carried over to Balance Sheet 128.84 69.96
Total 376.32 295.48
Previous year figures have been regrouped as per Revised Schedule VI of
the Companies Act, 1956 introduced by Ministry of Corporate Affairs
vide notification dated February 28, 2011.
PERFORMANCE
Your Company registered a remarkable growth in its operations. The
operating profit before charging depreciation and tax amounted to Rs.
403.08 crore as against Rs. 309.78 crore in the preceding year;
representing a rise of 30%. Profit After Ta x (PAT) before extra
ordinary items went up by 33% to Rs. 306.36 crore from Rs. 229.70 crore in
the previous year. The EPS improved to Rs. 28.97 as against Rs. 26.43 of
the previous year.
Besides Company's core business of providing housing finance, it also
carries on vertical businesses such as insurance and property services.
These vertical businesses are operated through Company's subsidiary
/associate companies which have strong synergies with the Company and
offer the customers wide range of financial products and services under
DHFL brand.
The Proposed merger of subsidiary First Blue Home Finance Limited and
DHFL Holdings Private Limited with the Company would further
consolidate the Company 's position in the housing industry.
Lending Operations
The cumulative loan disbursements of the Company as at the end of
financial year 2011-12 was Rs. 28,805 crore as compared to Rs. 19,739.76
crore in the previous year. The housing loans/other loan sanctioned
during the year ended 31st March, 2012 were to the extent of Rs.
12,845.31 crore as against Rs. 8,949.48 crore sanctioned during the
previous year.
Disbursement
The loan disbursed during the year ended 31st March, 2012 was to the
extent of Rs. 9,065.24 crore as against Rs. 6,505.54 crore disbursed during
the previous year.
Sale/assignment of Loans:
During the year, your Company securitized pool of housing and property
loans and managed the joint syndicated loans where banks and others
have participated aggregating to Rs. 1,637.78 crore. These assets have
been de-recognised in the books of the Company. Your Company is
responsible for collection and getting servicing of the securitized
portfolio on behalf of the buyer investor. In terms of the
securitization agreement, your Company pays to
buyer/investor/participant on monthly basis the collection amount,
subject to retention of agreed extra interest spread for the Company.
Instrument through which loans have been sold / assigned have been
rated by external credit rating agencies and carry a rating indicating
the highest degree of safety regarding timely servicing of financial
obligations.
Loan Book:
As at 31st March, 2012, the loan book stood at Rs. 19,355.38 crore as
against Rs. 14,121.98 crore in the previous year an increase of 37.06%.
DIVIDEND
In view of the overall performance of the Company and the objective of
rewarding shareholders, while retaining capital to maintain a healthy
capital adequacy ratio to support future growth, the Board of Directors
has recommended a dividend of Rs. 3.50 per share (35%) on 11,68,39,981
equity shares of Rs. 10 each for the financial year ended 31st March,
2012, subject to approval of the shareholders at the ensuing Annual
General Meeting, as compared to dividend of Rs. 3.50 per share (35%) for
the financial year ended 31st March, 2011. This dividend shall be
subject to tax on dividend to be paid by the Company. The total outgo
on account of dividend (including dividend distribution tax) will be Rs.
47.53 crore as against Rs. 42.76 crore in the previous year.
Your Company has paid dividend of Rs. 8 lakh and Rs. 1 lakh as tax on
distribution of dividend to new shareholders on account of Final
Dividend for the year 2010-11 as required under the Listing Agreement
as those shares were allotted prior to record date for the dividend
payment and after the date of earlier year balance sheet.
Equity shares that may be allotted on allotment of equity shares under
Employee Stock Option Scheme as well as allotment, if any, of shares
pursuant to approval of Scheme of Amalgamation before the date of the
book closure for payment of dividend shall rank pari passu with the
existing shares will be entitled to receive the dividend for the
financial year 2011-12.
UNCLAIMED DIVIDEND TRANSFERED TO INVESTORS EDUCATION AND PROTECTION
FUND (IEPF)
In terms of Section 205C of the Companies Act, 1956, the amount
(dividends) that remained unclaimed and unpaid for more than 7 years
from the date become first due for payment, shall be transferred to
IEPF (Fund). In terms of the applicable statutory provisions of the
Companies Act, 1956, no claim would lie against the Company or the said
Fund after such transfer to IEPF.
The Company has been intimating the shareholders to lodge their claim
for payment due, if any, from time to time and such claims have been
settled. Despite constant and sincere efforts to pay the unclaimed
dividend to the respective shareholders, certain amount still remains
unclaimed. The Company has been intimating the shareholders to lodge
their claim for dividend from time to time and such information is
being mentioned in the Annual Reports every year.
Unclaimed dividend amounting to Rs. 4.97 lakh that has not been claimed
by shareholders for the financial year 2003-04 has been transferred to
Investor Education and Protection Fund (IEPF) during the month of
September, 2011, as per the provisions of the Companies Act, 1956. As
per section 205(B) of the Companies Act, 1956, no claim would lie
against the Company or the said fund after the transfer.
The unpaid and unclaimed amounts lying with company for the last seven
(7) financial years has been uploaded on the Company's website.
Shareholders who have not claimed the said dividend may write to
Registrars and Share Transfer agents.
SHARE CAPITAL
During the year, the Company continued with its focus on measures to
improve its net worth.
(a) Qualified Institutional Placement:
Pursuant to a special resolution passed under section 192A of the
Companies (Passing of the resolution by postal ballot) Rules, 2011 by
the shareholders of the Company on 19th January 2012, your Company
issued 1,19,09,873 (One Crore Nineteen Lakh Nine Thousand Eight Hundred
Seventy Three) equity shares of face value of Rs. 10/- each at a price of
Rs. 255.50 per equity (including a premium of Rs. 245.50 per equity share)
aggregating to Rs. 304,29,72,552 (Rupees Three Hundred Four Crore, Twenty
Nine Lakh, Seventy Two Thousand, Five Hundred and Fifty Tw o Only) to
Qualified Institutional Buyers (QIBs) in terms of Chapter VIII of the
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 ("SEBI ICDR Regulations"), as amended.
The QIP was opened for subscription to QIBs on Wednesday, 22nd
February, 2012 and closed on Friday, 24th February, 2012. The allotment
of equity shares to QIBs was made on 29th February, 2012. The BSE and
the NSE had given trading permission for the equity shares issued to
QIBs on 2nd March, 2012.
(b) Employee Stock Option Schemes:
During the year under review, the Company allotted in tranches 5,03,706
equity shares of Rs. 10/- each upon exercise of stock options to the
eligible employees of the Company under the Employee Stock Option
Scheme à 2008 and 2009.
In view of above allotments the paid-up equity share capital of the
Company increased from 10,44,26,402 equity shares of Rs. 10/- each as on
31st March, 2011 to 11,68,39,981 equity shares of Rs. 10/- each as on
31st March, 2012.
(c) Equity Shares to be allotted pursuant to the sanctioned Scheme of
Amalgamation
On sanction of the Scheme of Amalgamation of First Blue Home Finance
Ltd and DHFL Holdings Private Ltd. with your Company (the Scheme) by
the respective High Courts, the Company will be required to allot an
aggregate of 1,08,86,375 fully paid up equity shares of Rs. 10/- each, to
certain shareholders of First Blue Home Finance Ltd.
Post allotment of the aforesaid shares, the paid- up equity share
capital of the Company will increase to 12,77,26,356 equity shares.
The Company has paid the listing fees payable to the BSE and the NSE
for the financial year 2011-12 in time.
RESOURCE MOBILISATION
Financial Year 2011-12 turned out to be a year of reckoning for most
countries. India witnessed rapid slowdown in growth, coupled with near
double-digit inflation. Due to inflationary pressures, Reserve Bank of
India had to tighten the monetary policy by increasing the key interest
rates.
Subordinated Debt:
During the year, your Company raised Rs. 75 crore through the issue of
long-term Unsecured Redeemable Non-Convertible Subordinated Debentures.
The subordinated debt was assigned an 'BWR AAA' rating by Brickworks
and rating by CARE 'AA '.
As at 31st March, 2012, your Company's outstanding subordinated debt
stood at Rs. 655 crore. The debt is subordinated to present and future
senior indebtedness of your Company and has been assigned the rating by
CARE and Brickworks. Based on the balance term to maturity, as at 31st
March, 2012, Rs. 582.00 crore of the book value of subordinated debt is
considered as Tier II under the guidelines issued by the National
Housing Bank (NHB) for the purpose of capital adequacy computation.
Non-Convertible Debentures (NCD):
During the year, your Company issued NCDs amounting to Rs. 730.20 crore
on a private placement basis. The Company's NCD issues have been listed
on the Wholesale Debt Market (WDM) segment of the NSE. The Company's
NCDs have been assigned the rating of 'AA ' by CARE and 'BWR AAA' by
Brickworks. As at 31st March, 2012, NCDs outstanding stood at Rs.
1,850.20 crore.
Innovative Perpetual Debt Instrument
During the year under review your Company has issued Innovative
Perpetual Debt Instruments ("IPDI") qualifying for Tier II capital in
to increase its capital adequacy ratio and fund its growing business
operations. Your Company has raised the IPDI of principal amount of Rs.
125.20 crore, which qualify as Tier II capital of the Company, in
conformity with NHB guidelines. The IPDI was assigned an 'AA-' rating
by both CARE and Brickworks.
Commercial Paper:
The Commercial Paper (CP) program of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the rating of P1 (P One Plus) having validity period of
twelve months. During the year your Company issued CPs to the extent of
Rs. 1,454.40 crore in tranches and placed them with investors' at the
most competitive rates of interest. As at 31st March, 2012, commercial
papers outstanding stood at Rs. 401.40 crore.
Loans from Banks:
As part of its liability management, your Company endeavors to
diversify its resource base in order to achieve an appropriate maturity
structure and minimize the weighted average cost of borrowed funds.
During the year under review, fresh term loans of Rs. 4,045 crore were
availed from the commercial banks and financial institutions, taking
the total term loan outstanding to Rs. 13,855.39 crore
Refinance from National Housing Bank (NHB):
During the year, your Company has drawn refinance amounting to Rs. 228.00
crore under NHB's Refinance Scheme to Housing Finance Companies.
Deposits:
During the Year, the Company has achieved consistent Growth. The
Outstanding Deposit as on the 31st March 2012, stood at Rs. 938.81 crore
compared to Rs. 557.29 crore in the previous year. Consistent Increase in
the Investor has also been witnessed taking the Customer Accounts to
63,867 Nos.
Deposit Growth can be sustained only when the existing customers are
retained effectively. It becomes even more critical for investor
customer as investment opportunities are ample. We have taken a
structured approach in sustenance of fixed deposit growth by focusing
on the renewal of maturing fixed deposit database with the help of
Direct Channel. Based on an analysis of the maturing database, a
detailed strategy has been formulated and accordingly an unique
two-fold program was developed which involved sending an unique Direct
Mailer that seeded the thought of reinvestment amongst the depositors
which was followed by a focused tele-calling activity thus reinforcing
the need to reinvest amongst the customers. The opportunities that
arose through these concentrated efforts were disseminated to the
business teams for further fulfillment.
As on 31st March 2012, 975 depositors had not claimed the deposits
amounting to Rs. 5.10 crore. Depositors have been intimated regarding
the maturity of their Deposits, with a request to either renew or claim
their matured deposits. Fixed Deposits accepted by your Company have
been secured appropriately to extent of Floating Charge created by way
of Deed of Trust, as per guidelines issued by NHB.
CREDIT RATING
Your Company has received an A1 credit rating from CRISIL, which was
reaffirmed in May, 2012, for its Rs. 1,500 crore short-term debt program
indicating a "very strong degree of safety regarding timely payment of
financial obligations".
In April 2012, CARE reaffirmed credit ratings for our fixed deposits
(CARE AA up to Rs. 1,000 crore), our non-convertible debentures (CARE
AA up to Rs. 2,605 crore in aggregate for three instruments) and
subordinated debt (CARE AA up to Rs. 980 crore) and our Innovative
Perpetual Debentures (CARE AA- upto Rs. 300 crore). Your Company has also
obtained credit ratings for its long term bank borrowings (CARE AA
upto amount of Rs. 15,814 crore).
A credit rating of CARE AA indicates that instruments with that rating
are considered by CARE to "have a high degree of safety regarding
timely servicing of financial obligations" among rated instruments
while a credit rating of CARE AA reflects the comparative standing
within the CARE AA category.
In January, 2012, BWR reaffirmed credit ratings for our fixed deposits
(BWR FAAA up to Rs. 1,000 crore), our non-convertible debentures (BWR AAA
up to Rs. 1,000 crore) and our subordinate debt (BWR AAA for two
instruments of Rs. 250 crore each) for an additional subordinated debt
instrument (BWR AAA up to Rs. 400 crore) and our innovative perpetual
debentures (BWR AA- upto Rs. 300 crore).
A BWR FAAA rating indicates the "highest safety in terms of timely
servicing of interest and principal" for our fixed deposits and a BWR
AAA credit rating indicates the "highest degree of safety regarding
timely servicing of financial obligations", as compared to other rated
instruments.
CAPITAL ADEQUACY
As required under NHB Directions your Company is presently required to
maintain a minimum capital adequacy of 12% on a stand-alone basis. In
addition, the NHB Directions also require that your Company transfers
minimum 20% of its annual profits to a reserve fund. The following
table sets out our stand- alone capital adequacy ratios as at March 31
2010, 2011 and 2012.
Particulars As on 31st March
2012 2011 2010
Capital Adequacy 18.24% 19.39% 17.26%
Ratio (Stand-alone)
(Approximately)
Your Company's stand-alone capital adequacy ratio was at 18.24%
approximately as on 31st March, 2012, which we believe provides an
adequate cushion to withstand business risks and is above the minimum
requirement of 12% stipulated by the NHB.
NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY
Your Company adhered to the prudential guidelines for Non performing
Assets (NPAs), issued by the National Housing Bank (NHB) under its
Directions of 2010, as amended from time to time. As per the prudential
norms, the income on such NPAs is not to be recognised.
As per the prudential norms prescribed by the NHB, the Company has made
provision for contingencies on standard as well as non-performing
housing loans and property loans. The Company has also made additional
provision to meet unforeseen contingencies.
The National Housing Bank (NHB) vide its circular dated 5th August,
2011 read with circular dated 19th January, 2012 has introduced
additional contingency provisioning requirements. The Company has met
this requirement by utilising excess reserve created in earlier year
and by making further provision during the year. As a matter of prudent
risk management and based on experience, the Company has created on its
own in the past, additional reserve on its standard assets towards
contingencies beyond the NHB requirements. The Company has fully
utilised these additional contingency reserve for meeting the
additional requirements of NHB and has also provided for the balance.
The Securitizations and Reconstructions of Financial Assets and
Enforcement of Security Interest Act 2002 (SARFAESI) has proved to be a
useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
defaulters. The Company has acquired certain assets under SARFAESI
which are retained for the purpose of sale under the rules and
regulations of SARFAESI involving Rs. 14.03 crore.
BRANCH EXPANSION & BUSINESS TIE- UP
Your Company has a strong marketing and distribution network. The
Company has its registered office in Mumbai and has 122 branches, 72
service centres, 24 camp locations, 8 regional processing units and 4
central processing units in India, spread across the length and breadth
of India. Additionally, your Company has international representative
offices located in London and Dubai to cater to the needs of
non-resident Indians. Your Company has entered into strategic housing
loan distribution and syndication arrangements with public and private
sector banks, including Punjab & Sind Bank to cater to the northern
India, United Bank of India for eastern India, Central Bank of India
for central India and Yes Bank Limited for across India. This gives us
wider reach and access to the Banks' network, where both are set to
gain. Our strong network coverage is designed to provide increased
penetration to cater to the evolving needs of our existing customer
base and tapping a growing potential customer base throughout India.
INVESTMENTS
The Investment Committee constituted by the Board of Directors is
responsible for approving investments in line with limits as set out by
the board. The decisions to buy and sell upto the approved limit
delegated by the board are taken by the Chairman &
Managing Director, who is assisted by two Senior Executives i.e. Sr. GM
Account & Taxation and GM (Finance & Resources). 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 NHB.
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 and short term deposits with banks.
During the year, your Company earned Rs. 1.82 crore by way of Income from
Mutual funds and Rs. 13.56 crore by way of interest on deposits placed
with banks. At the end of the year, your Company maintained Rs. 358.41
crore by way of deposits with banks.
As per NHB guidelines, HFCs 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 31st March, 2012,
your company has invested Rs. 48.48 crore in approved securities
comprising of government securities, government guaranteed bonds and by
way of Bank Deposits for Rs. 47.18 crore. It is maintained within the
limits prescribed by NHB.
INSURANCE OF PROPERTY
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate even of such incidents.
The employees of the Company are covered under the mediclaim facility
against hospitalization.
DIRECTOR'S AND OFFICER LIABILITIES
This policy covers the Director's and officer of the Company against
the risk of third party actions arising out of their actions
/directions which may have resulted in financial loss to any third
party. The Company has appropriately insured itself to mitigate against
such risk from any third party.
INSURANCE COVERAGE TO BORROWERS
All the borrowers of the Company were insured against the risk of
accidental death, property insurance and loss of employment (upto 3
EMI's) by Future Generali General Insurance Co. Ltd.
Your Company is a Group Administrator (Master Policy Holder) of 'Home
Assure' a life insurance mortgage reducing term assurance product from
ICICI Prudential Life Insurance Co. Ltd, whereby the borrowers are
insured for the outstanding loan amount in the event of occurrence of
death during the loan tenure.
In addition your Company also offered 'Home Safe Plus' a general
insurance product from ICICI Lombard General Insurance Co. Ltd to
borrowers availed loan against property to insure against accidental
death, property insurance, critical illness and loss of employment (up
to 3 EMI's).
The primary objective is to insure our loan portfolio from default due
to unforeseen events with our borrowers. Your Company has insured 96%
of all the new customer acquisitions and 81% of the total loan
portfolio acquired in FY 2010-11. The overall fee income growth in FY
2011-12 was 52% over last FY 2010-11.
NHB GUIDELINES
The Company has been following the various Circulars, Notifications and
Guidelines issued by National Housing Bank (NHB) from time to time. The
Circulars and the Notifications issued by NHB are also placed before
the Audit Committee / Board at regular intervals along with the
compliance of the same.
During the year under review, NHB has conducted an inspection of the
Company under Section 34 of the NHB Act, 1987 and Company has furnished
the replies to the same.
KYC & AML STANDARDS
During the year under review, the National Housing Bank has issued
revised comprehensive Know Your Customer (KYC) Guidelines and Anti
Money Laundering Standards in the context of recommendations made by
the Financial Action Task Force on Anti Money Laundering Standards and
on Combating Financing of Terrorism Standards. During the year, the
Board reviewed and noted the amendments to the Company's KYC and
Prevention of Money Laundering Policy as stipulated by NHB. Your
Company has adhered to the compliance requirements in terms of the said
policy for monitoring and reporting cash/ suspicious transactions.
The Fair Practices Code framed by NHB seeks to promote good and fair
practices by setting minimum standards in dealing with customers,
increase transparency so that customers have a better understanding of
what services they can reasonably, encourage market forces through
competition to achieve higher operating standards, promote fair and
cordial relationships between customers and the housing finance company
and foster confidence in the housing finance system. During the year,
your Company has adhered to the Fair Practices Code as approved by the
Board of Directors.
CODE OF CONDUCT:
Your Company has adopted a revised Code of Conduct for its Board
Members and Senior Management personnel. The code of conduct has also
been posted on the official website of the Company. A copy of the code
of conduct has been circulated to the directors and senior Management.
The Declaration by the Chairman & Managing Director of the Company
regarding compliance with the Code of Conduct for Board Members and
Senior Management is annexed with the Corporate Governance report.
RISK MANAGEMENT FRAMEWORK:
Your Company has a Risk Management Framework, which provides the
mechanism for risk assessment and mitigation. The ALCO Management
Committee (AMC) comprises the Chairman & Managing Director, the Chief
Executive Officer, Chief Operating Officer and other members of senior
management.
During the year, the AMC reviewed the risks associated with the
business of your Company, its root causes and the efficacy of the
measures taken to mitigate the same. The Board of Directors also
reviewed the key risks associated with the business of your Company,
the procedures adopted to assess the risks and their mitigation
mechanisms.
BRANDING
We believe that the 'DHFL' brand is one of the most important
intangible assets that we own. During this fiscal year, the Company
remained resolutely committed to building its brands for the long term
and continues to invest in their marketing, sales and distribution in
all key markets, such as:
- Brand Campaign: Brand commercial did the aerial carpet bombing during
October à November 2011 with 8971 spots across 47 Regional General
Entertainment Channels and Business & News Channels and created high
brand salience at a blanket level across all markets. This was also
supported by high visibility Print Innovations in key select markets.
- Sustenance Campaign: A well designed Print Media plan sustaining for
almost 16 weeks starting 17th August carried rational product based
communication with creative variations comprising home loan messages of
generic, occupational, clear product descriptive, festive based
communication and fixed deposits in 27 regional dailies to reach out
129 plus DHFL operating locations through a cumulative of 400 plus
insertions.
- Corporate Campaign: The campaign focused at delivering the Brand
Essence to the Corporate Audience which involved Key decision makers,
Investor Pools etc. The campaign was activated between Nov à Dec 2011
involving high visibility media chosen basis the desired TG. TVC: Over
3000 spots were consumed across key business & news Channels like ET
Now, CNBC, BBC World, Bloomberg among others. This was further
supported through 39 highly targeted insertions in over 13 Business
Magazines like Business World, The Economist, Business Today, Forbes,
and Outlook etc. While the Online design covered most prominent online
portals catering to the news & business affluent audience like
Bloomberg, Money control, Reuters etc delivering 2,54,67,662
impressions.
- Retail Activations: Retail level marketing programs gained a lot of
prominence this year. Over 33 trade fairs were participated across the
year. 40 Business Associate Meets conducted for alternate referral
channel development. DHFL Express a unique activation program conducted
across zones in Mumbai, Pune & Rest of Maharashtra, Delhi, Rajasthan,
Kerala & Karnataka generating over 6000 enquiries. These events
cumulatively supported in delivering disbursements of 603 files worth Rs.
36.5 crore.
- Online: This year saw the DHFL website migrating to the Wordpress
platform thereby easing out the content management aspect as well as
enhancing the auto optimization for Search Engine Optimization (SEO)
which is key in today's digital marketing space. DHFL also went active
on the Mobile space through the launch of its Mobile site, which today
enjoys a 300% growth in traffic. The platform generated over 18000
enquiries.
- Sports: Your Company is the associate team Sponsor for Mumbai Indians
the most followed franchisee of the Indian Premier League (IPL)
Twenty20.
DHFL had over a million visits to our website www.dhfl.com on business
and property related topics during the year. We continued to have
leadership presence at premier housing finance industry and real estate
property events.
Awards & Recognition
During this fiscal year, your Company has received the following Awards
and Recognition, by the various bodies in recognition of Company's
operation and conduct of business, which has made us proud:
- DHFL was awarded the Powerbrand status for the 2nd year
consecutively. This is recognition by the Indian Consumer who has
chosen DHFL as a Powerbrand, indicating a high degree of brand
satisfaction across performance parameters.
- DHFL was ranked 337th amongst the top Fortune India 500 companies for
the year 2011-12.
- Ranked as 47th amongst India's' 50 Biggest Financial Companies for
the year by Business World Magazine.
- DHFL won Marketer of Year à Realty Plus Excellence Awards of the Year
à 2012.
- DHFL won Greentech HR Excellence Award à 2012 for Best Strategy (Gold
Award).
- DHFL Wins "Realty Plus Newsmaker of the Year-2011.
- DHFL become Life time corporate member of with The Indian Institution
of Valuers (India).
Shri Kapil Wadhawan - Chairman & Managing Director received the Top
Honour, as the undisputed, unanimous choice, for the POWERBRANDS HALL
OF FAME CORPORATE ICON OF THE YEAR 2011 Ã 2012. The PowerBrands Hall of
Fame seeks to honour leaders in the business fraternity who have carved
a niche for themselves with their remarkable strategies that have
channelized growth and been instrumental in taking their companies
ahead.
All these accolades are a reflection of DHFL's consistency when it
comes to delivering shareholder value and speaks volumes about it being
customer- centric and service driven.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Considering these, the concept of Corporate Social Responsibility (CSR)
is the demand of the current era. CSR has become a concept that
frequently overlaps similar approaches, such as corporate
sustainability, corporate sustainable development and corporate
responsibility.
To meet CSR, your Company along with the International Finance
Corporation ("IFC"), a member of the World Bank Group, and DHFL Vysya
Housing Finance Ltd., established Aadhar Housing Finance Private
Limited (AHFPL) in May 2010 to meet the needs of the under-served lower
income segment of society with focus and technical expertise. AHFPL
primarily targets states with a relatively larger lower income segment
such as Uttar Pradesh, Madhya Pradesh, Jharkhand, Orissa, Chhattisgarh
and Bihar. The ticket size of loans to be originated will be limited
to a maximum of Rs. 6 lakh.
Your Company is a socially responsible organization and always keen to
promote the interest of customers, employees, shareholders and
communities as a whole. Your Company has upheld its CSR in the
following ways:
Our founder chairman's vision and legacy continues to guide our company
and our people. Social responsibility is a way of life at DHFL. It
means investing in and enriching our communities. It means encouraging
employee volunteerism.
CSR was the main focus this year which received overwhelming
participation and was a huge success.
Blood Donation:
To commemorate our heroes on this year's Independence Day, DHFL
organized a blood donation drive in association with the Red Cross
Society of India on the 12th August, 2011. The event was received with
eager participation from the DHFL family.
Joy of Giving:
Employees came forward to celebrate the Joy of Giving by donating
newspapers, magazines etc. DHFL supported Umang Foundation's
initiative of supporting stationary kits to 300 underprivileged
children in the Joy of Giving week.
Children's Day and Toy Donation Drive:
This Children's Day, DHFL conducted a Toy Donation Drive in association
with Mumbai Mobile Crèches (MMC). The participation was quite
enthusiastic and we managed to collect 5 large cartons of toys. DHFL
volunteers also visited the Sion centre of MMC spent some time with the
children and handed over the toys. A printer, 2 desktops and
stationary for the kids were donated on the occasion.
DHFL Touches Lives Of Children Through Balakalakaar
DHFL was the title sponsor of AIESEC Mumbai's Balakalakaar.
Balakalakaar 2011 saw a 1000 children from 10 BMC schools participate
in a month long program involving a series of workshops. Based on their
performance, 100 children were shortlisted to showcase their talents
and receive scholarships at the DHFL Balakalakaar Grand Finale 2011
event held in December 2011.
Eye Donation Campaign:
Employees of DHFL vowed to pass the gift of sight and pledged to donate
their eyes facilitated by Umang Donation, a NGO committed to social
causes.
WORKPLACE DIVERSITY
1. DHFL, as an equal opportunity employer, celebrated the
International Women's Day. All women employees were recognized with
chocolates and a card.
2. Regional festivals like Navratri, Onam, Christmas etc are
celebrated with great fervor thus promoting a cohesive environment.
Your Company in association with Mumbai Mobile Crèches participated in
Standard Chartered Mumbai Marathon - 2012 on 15th January, 2012. Your
Company had taken initiatives to help support the cause of children of
construction workers at the construction sites in Mumbai.
In line of agreement with Concern India Foundation (CIF), based in
Mumbai, your Company continues to support for promoting activities
linked to upliftment of members belonging to weaker sections of
society. Concern India Foundation is undertaking the activities linked
to the following major issues:
- Education
- Community Development
- Health
- Environment
DHFL Employee Welfare Trust
Your Company also provides assistance for education to its employees
who aspire to undertake education through its trust "Late Shri Rajesh
Kumar Wadhawan DHFL Employees Welfare Trust".
SECRETARIAL AUDIT
Secretarial Audit is being carried out at the specified period, by
practicing company secretary. As a measure of good corporate governance
the Company had also appointed M/s. Aabid & Co, practicing company
secretaries to conduct Secretarial Audit of the Company. The
Secretarial Audit Report for the Financial Year ended 31st March, 2012
is provided in this Annual Report.
HUMAN RESOURCES
During the year the Company managed to attract talent from leading
banks, financial institutions and multinational organizations.
Your Company is fully operational with its globally renowned HRIS
Peoplesoft package for its HR systems and processes.
Your Company believes that the ability to keep learning is a key
sustainable advantage and hence strong emphasis is placed on constantly
upgrading the skills of its employees. During the year, all new
recruits underwent an induction training programme. In addition,
employees who were promoted across various grades attended Executive
Development and Managerial Skills programmes. During the year, a
leadership programme was designed and conducted by the Indian Institute
of Management, Ahmedabad, for a select group of employees identified on
the basis of their performance and future potential.
Amongst many others, internal training programmes were conducted in the
areas of housing finance, corporate risk management; negotiate selling
skills, credit risk management KYC and AML measures. Your Company also
nominated staff members for a variety of external programmes including
real estate and housing, education, treasury and risk management,
information technology, taxation and International Financial Reporting
Standards.
Measures were taken to reach out to the employees through revised
incentive schemes, several reward and recognition programs and employee
engagement activities. A complete On-Boarding process including the
Buddy program was put in place to ensure that new employees feel at
ease in the initial period of joining.
During the year, the Company monitored more closely the individual
performances, month on month and the weak performers were put through a
structured Performance Improvement Plan (PIP).
The work force of the Company as on 31st March 2012 was 1,400. The
total work force cost during the year has gone up by 44.70% from Rs.
59.86 crore to Rs. 87.81 crore. This was mainly due to increase in work
force to meet the requirements on account of significant expansion in
terms of geographical growth as well as business volumes and the salary
revisions effected during the year.
During the year, the Company received an award for "The Best Strategy"
Gold Award by Greentech
Foundation as part of their HR Excellence Award, 2012. The HR- Head
received the "HR Leader" Gold Award, 2012 given by the same foundation.
The change management and transformation process including the scaling
up of HR operations to meet the company's dynamic needs, have
contributed in no small measure to the robust growth of the company.
Your Company has entered into Deed of Trust with Life Insurance
Corporation of India which covers the Company's employees under the
group gratuity schemes with the Life Insurance Corporation of India
('LIC'). The schemes are defined benefit schemes and are funded in line
with the LIC's actuarial valuation carried out at year end.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed thereunder, the names and other
particulars of employees are set out in the annexure to the Directors'
Report. In terms of the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956 the Director Report is being sent to all the
shareholders of the Company excluding the annex. Any shareholder
interested in obtaining a copy of the said annex may write to the
Company.
EMPLOYEES STOCK OPTION SCHEME (ESOS)
Employees Stock Option Scheme (ESOS) was approved and implemented by
the Company and Options were granted from time to time to employees
under ESOS 2008 and ESOS 2009 - Plan I & II in accordance with the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 (''the SEBI
Guidelines'').
INFORMATION TECHNOLOGY AND COMMUNICATIONS
During the year 2011-12, apart from upgrading the existing software
applications with enhanced/ added features to meet the current and
emerging business needs, certain new application systems were
implemented.
Your Company has launched the customer portal in the financial year
2011-12 where the customers can view their loan account details
on-line. This facility is primarily created to enable the customer to
view the loan details at their convenience. This will also reduce the
customer visit to the branches, which in turn will help to gradually
reduce the manpower required at the branches to service the customer.
Currently, we have enabled this facility for the post disbursement
process, in the second phase we are planning to enable this facility to
customers whose application has been logged into the system where they
will be able to track the application status. We will initiate various
activities with the help of marketing team to educate and make the
customers aware of this facility so that we have more number of
customer registrations in the customer portal.
AMALGAMATION OF FIRST BLUE HOME FINANCE LTD AND DHFL HOLDINGS PRIVATE
LTD. WITH YOUR COMPANY
The Board of Directors of your Company at its meeting held on 28th
September, 2011 had, approved amalgamation of First Blue Home Finance
Limited and DHFL Holdings Private Limited with your Company in terms of
a Scheme of Amalgamation ("the Scheme") under Sections 391 to 394 of
the Companies Act, 1956. The Board had approved the share swap ratio of
10:97, meaning thereby 10 (Ten) equity shares of Rs. 10/- each fully
paid-up in your Company for every 97 (Ninety Seven) equity shares of Rs.
10/- each fully paid-up in First Blue Home Finance Ltd. Said swap ratio
is based upon the report submitted by M/s. Ernst & Young and the
fairness opinion of the same had been confirmed by Standard Chartered
Bank, an independent merchant banker. The Appointed Date of the
amalgamation was April 1, 2011.
The aforesaid Scheme of Amalgamation of First Blue Home Finance Ltd and
DHFL Holdings Private Ltd into and with your Company was approved by
equity shareholders of your Company with requisite majority at the
meeting held on 17th April, 2012. Subsequently, your Company filed the
petition before the Hon'ble High Court at Bombay.
SUBSIDIARY COMPANIES
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any members of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open to inspection at the Registered Office
of the Company and that of the respective subsidiary companies. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies. The same will also be
hosted on our website, www.dhfl.com.
During the year under review your Company disinvested majority of its
equity shareholdings in DHFL Vysya Housing Finance Ltd and DHFL
Property Services Ltd to the existing promoters / promoter group of
your Company. Disinvestment of equity shares in DHFL Vysya Housing
Finance Ltd. was to compliance with NHB requirement.
In view of the aforesaid disinvestment, the shareholding of your
Company, in DHFL Vysya Housing Finance Ltd is below 10% of the total
paid up equity capital of the DHFL Vysya Housing Finance Ltd and has
ceased to be subsidiary of your Company and your Company does not hold
any equity stake in DHFL Property Services Ltd.
Accordingly, Aadhar Housing Finance Private Ltd, which was promoted by
your Company also ceases to be subsidiary of your Company due to
disinvestment of Company's equity in DHFL Vysya Housing Finance Ltd.
Due to aforesaid disinvestment, DHFL Vysya Housing Finance Ltd, DHFL
Property Services Ltd and Aadhar Housing Finance Private Ltd. have
ceased to be subsidiaries. However, the said companies shall continue
to be Associate/Group Companies of your Company.
Your Company has 3 subsidiaries, namely, First Blue Home Finance Ltd,
First Blue Financial Consultants Ltd. and DHFL Holdings Private Ltd.
CONSOLIDATION OF ACCOUNTS
The audited Consolidated Accounts and Cash Flow Statement, comprising
of DHFL and its subsidiary, First Blue Homes Finance Ltd. First Blue
Financial Consultants Ltd and DHFL Holdings Private Ltd. are annexed to
this Annual Report. The Auditors' Report on the Consolidated Accounts
is also attached. The Consolidated Accounts have been prepared in
accordance with the Accounting Standards prescribed by the Institute of
Chartered Accountants of India in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO
The particulars regarding foreign exchange earnings and expenditure
appear as Note No. 31.1 in the Notes forming part of the financial
statement for the year ended 31st March, 2012.
Since the Company is not engaged in any manufacturing activity, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 are not applicable.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 read with
the Clause 158 of the Articles of Association of the Company, Shri
Dheeraj Wadhawan and Dr. P. S. Pasricha, directors of your Company
retire by rotation and being eligible; offer themselves for re-
appointment at the ensuing Annual General Meeting. Necessary
resolutions for the re- appointment of the aforesaid directors have
been included in the notice convening the ensuing AGM.
Brief resume of the Directors proposed to be appointed / re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership / chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges, are provided in the Report on Corporate
Governance forming part of the Annual Report. All the directors of the
Company have confirmed that they are not disqualified for being
appointed/ reappointed as directors in term of Section 274(1)(g) of the
Companies Act, 1956.
INTERNAL AUDIT
Your Company has a well equipped internal audit department carrying out
a regular independent evaluation of various activities undertaken by
your Company through its branches, Zonal Offices and Corporate Office.
The Internal Audit Department is headed by senior management personnel.
The audit function maintains its independence and objectivity while
carrying out assignments. It evaluates on a continuous basis, the
adequacy and effectiveness of internal control mechanism, adherence to
policies, procedures as well as regulatory and legal requirements. The
function also proactively recommends improvement in operational
processes and suggests streamlining of controls against various risks.
The Audit Committee of the Board reviews the performance of the
internal audit on continuous basis, gives direction to its
functionaries and reviews effectiveness of internal control systems.
In addition to internal audit, concurrent audit is conducted on monthly
basis by engaging 22 independence practicing Chartered Accountant Firms
in most of our branches covering major volume of our business. Focus of
concurrent audit is mainly on transaction level adherence to policies,
procedures and guidelines issued by management and compliance to
regulatory and statutory guidelines.
Systems and procedures are being upgraded to provide checks and alerts
for avoiding/detecting fraud arising out of misrepresentation by
borrower/s while availing the housing loans.
AUDITORS
M/s. B.M. Chaturvedi & Co., Mumbai, Chartered Accountant [Firm
Registration No.114317W], retire at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. M/s. B.M.
Chaturvedi & Co., have confirmed that if reappointed, it shall be
within the limits of Section 224 (1B) of the Companies Act, 1956. The
necessary eligibility certificate under Section 224(1B) of the
Companies Act, 1956, was received from them. The Audit Committee and
Board of Directors recommend the appointment of M/s. B.M. Chaturvedi &
Co., Chartered Accountants, as the auditors of your Company.
AUDITORS REPORT
The notes to the accounts referred to in Auditors Report are
self-explanatory and therefore do not call for any further comments.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited accounts
containing the Financial Statement for the year ended 31st March 2012
are in conformity with the requirements of the Companies Act, 1956 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 are audited by the Statutory Auditors, M/s.
B. M. Chaturvedi & Co., Chartered Accountants, Mumbai.
In accordance with the provisions of section 217 (2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
directors state that:
(i) in the preparation of accounts, the applicable accounting standards
have been followed;
(ii) they have 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 31st March, 2012 and of the profit of the Company for
year ended on date;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities and
(iv) they have prepared the annual accounts on a going concern basis.
CORPORATE GOVERNANCE
Your Company has complied with the provisions of Corporate Governance
as under the amended Listing Agreements of the Stock Exchanges, with
which the Company's shares are listed. Pursuant to Clause 49 of the
Listing Agreements with the Stock Exchanges, the followings form part
of this Annual Report :
(i) Chairman & Managing Director's declaration regarding compliance of
Code of Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion & Analysis
(iii) Report on the Corporate Governance;
(iv) Auditors' Certificate regarding compliance of conditions of
Corporate Governance.
FUTURE OUTLOOK
Housing / real estate sector which is slowly coming out of the mid 2008
slump has received good support from Union Budget 2012- 2013. How the
budget has encouraged housing sector finance is given below:
- Existing scheme of interest subvention of 1 per cent on housing loan
further liberalized.
- Existing housing loan limit enhanced to Rs. 25 lakh under priority
sector lending.
- Limit of indirect finance under priority sector to housing loan
enhance to Rs. 10 lakh from Rs. 5 lakh
- Allowing External Commercial Borrowings (ECB) for low cost affordable
housing projects across major cities and towns and
- Setting up of a Credit Guarantee Trust Fund to ensure improved flow
of institutional credit for housing loans.
With the recent improvement in the demand for housing and real estate
sectors, activities in the housing, real estate sectors and
infrastructure sectors are expected to remain healthy in the coming
quarters. This will lead to a rise in credit demand for housing. The
liquidity conditions of your Company have remained comfortable during
the year. Your Company has successfully raised funds from bank as well
as non bank sources. Your Company does not expect any pressure on the
liquidity front. This is because liquidity conditions in the banking
system will continue to remain comfortable. A healthy demand for credit
for home loan coupled with comfortable liquidity conditions will lead
to a rise in disbursement.
ACKNOWLEDGEMENTS
Your Directors wish to place on record their gratitude to the National
Housing Bank, the Company's Customers, Bankers, Shareholders, Debenture
holders, Depositors and others for their assistance and co-operation
and who have helped the Company in its endeavour. The Board also places
on record its deep appreciation for the excellent support received from
the employees at all levels during the year. The Directors also like to
thank the Bombay Stock Exchange, the National Stock Exchange, NSDL,
CDSL and the Credit Rating Agencies for their co-operation.
for and on behalf of the Board
Kapil Wadhawan
Chairman & Managing Director
Dated : 10th May, 2012
Place : Mumbai
Mar 31, 2011
Dear Shareholders,
The Directors are pleased to present the 27th Annual Report on the
business and operations of your Company together with the Audited
Statement of Accounts for the year ended 31st March, 2011.
FINANCIAL RESULTS
The Financial performance of the Company for year ended March 31, 2011
is summarized below:- (Rs. in Crore)
2010-2011 2009-2010
Gross Income 1,451.24 992.55
Less : Interest 964.55 669.84
Overheads 176.91 117.69
Depreciation 3.73 2.83
Profit before Tax & Exceptional Items 306.05 202.19
Add:Exceptional Items 35.43 -
Profit before Tax 341.48 202.19
Less:Provision for taxation 76.35 51.50
Profit after tax 265.13 150.69
Add : Balance b/d from the previous year 30.35 24.74
Surplus available for appropriations 295.48 175.43
Appropriations
Transferred to Special Reserve under
Section 36(1)(viii) of the Income Tax Act, 1961 40.00 35.00
Transferred to General Reserve 100.00 75.00
Transfer to Contingency Reserve 35.00 -
Dividend on Preference Shares 00.02 .03
Dividend for Earlier Year 6.59 5.34
Proposed Equity Dividend 36.57 24.61
Tax on proposed Dividends 7.34 5.09
Balance carried over to Balance Sheet 69.96 30.36
Total 295.48 175.43
PERFORMANCE
Your Company registered a remarkable growth in its operations. The
operating profit before charging depreciation and tax amounted to Rs.
309.78 crore as against Rs. 205.02 crore in the preceding year;
representing a rise of 51.10%. Profit After Ta x (PAT) went up by
75.94% to Rs. 265.13 crore from Rs. 150.69 crore in the previous year. The
EPS improved to Rs. 26.43 as against Rs. 19.78 of the previous year.
The Company's core business is providing housing finance, and also
carries on vertical businesses such as insurance and property services.
These vertical businesses are operated through Company's
subsidiary/associate companies which have strong synergies with the
Company and offers customers a wide range of financial products and
services under DHFL brand. Detailed review of the operations of each
subsidiary companies are presented in the respective company's
Directors' Report, a brief overview of the major developments thereof
is also presented in the Management Discussion and Analysis, forming
part of this Report.
Lending Operations
The cumulative loans disbursement of the Company as at the end of
financial year 2010-11 was Rs. 19739.79 crore as compared to Rs. 13234.22
crore in the previous year. The housing loans/other loan sanctioned
during the year ended 31st March, 2011 were to the extent of Rs. 8,949.48
crore as against Rs. 5,273.96 crore sanctioned during the previous year.
Disbursement
The loan disbursed during the year ended 31st March, 2011 was to the
extent of Rs. 6,505.57 crore as against Rs. 3865.56 crore disbursed during
the previous year.
DIVIDEND
In view of the overall performance of the Company and the objective of
rewarding shareholders, while retaining capital to maintain a healthy
capital adequacy ratio to support future growth, the Board of Directors
has recommended a higher dividend of Rs. 3.50 per share (35%) on
10,44,26,402 equity shares of Rs. 10 each for the financial year ended
31st March, 2011, subject to approval of the shareholders at the
ensuing Annual General Meeting, as compared to dividend of Rs. 3.00 per
share (30%) for the financial year ended 31st March, 2010. This
dividend shall be subject to tax on dividend to be paid by the Company.
The total outgo on account of dividend (including dividend distribution
tax) will be Rs. 43.91 crore as against Rs. 29.70 crore in the previous
year.
As required under the Listing Agreement of the Stock Exchange(s), your
Company has paid dividend of Rs. 6.59 crore and Rs. 1.12 crore as tax on
the distribution of dividend for the financial year 2009-10 to new
shareholders as on 31st March, 2010 on account of allotment of equity
shares under QIP, Preferential issue and exercise of options under
Employee Stock Option Scheme before the date of the book closure but
prior to record date for the dividend payment.
Equity shares that may be allotted on allotment of equity shares under
Employee Stock Option Scheme before the date of the book closure for
payment of dividend which ranks pari passu with the existing shares
will be entitled to receive the dividend for the financial year
2010-11.
SHARE CAPITAL
During the year, the Company had focused on measure to improve its net
worth.
Pursuant to the approval of the shareholders at the Extra-Ordinary
General Meeting held on 18th May, 2010, for placement of equity shares
to Qualified Institutional Buyers (QIBs) and preferential issue of
equity shares to the Promoter Group Entities and M/s. Caledonia
Investment Plc. Accordingly the Committee of the Board of Directors has
issued and allotted aforesaid equity shares along with the equity
shares under DHFL ESOS Scheme's as under :
Qualified Institutional Placement :
During the year under review, your Company successfully completed issue
of 1,68,69,095 equity shares of Rs. 10/- each, at a price of Rs. 222.30 per
equity share, including premium of Rs. 212.30 per equity share,
aggregating to Rs. 375 crore to Qualified Institutional Buyers (QIBs) in
terms of Chapter VIII of the Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 ("SEBI
ICDR Regulations"), as amended. The QIP was opened for subscription to
QIBs on Thursday, 27th May, 2010 and closed Friday, 28th May, 2010. The
said QIP issue was overwhelmed by strong investor response and has been
successfully subscribed. The said QIP was allotted on 2nd June, 2010.
The BSE and the NSE had given trading permission for the equity shares
issued to QIBs on 9th June, 2010.
Equity Shares on Preferential Allotment Basis :
To further strengthen the Company's financial position and to generate
resources, inter alia, for investing in the businesses of the Company,
on 12th June, 2010, your Company issued and allotted 40,00,000 and
10,00,000 equity shares respectively of Rs. 10/- each, at a price of Rs.
222.30 per equity share (including a premium of Rs. 212.30 per equity
share), aggregating to Rs. 111.15 crore to Promoter Group Entities and
M/s. Caledonia Investment Plc. respectively on a preferential basis in
terms of the relevant Guidelines for Preferential Issues issued by the
Securities and Exchange Board of India. The equity shares allotted to
the Promoters Group Entities are locked-in for a period of three years
and M/s. Caledonia Investment Plc for a period of one year from the
date of allotment as per the SEBI guidelines.
Employee Stock Option Scheme's:
During the year under review, the Company allotted in tranches 5,30,763
equity shares of Rs. 10/- each upon exercise of stock options to the
eligible employees of the Company under the Employee Stock Option
Scheme à 2008 and 2009.
In view of above, the issued, subscribed and paid- up equity share
capital of the Company increased from 8,20,26,544 equity shares of Rs. 10
each as on 31st March, 2010 to 10,44,26,402 equity shares of Rs. 10/-
each as on 31st March, 2011.
Details of the shares issued and allotted under DHFL ESOS scheme's, as
well as the disclosures in compliance with Clause 12 of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines, 1999 are set out in Annexure to this
Report.
The Company has paid the listing fees payable to the BSE and the NSE
for the financial year 2010-11.
Redemption of Preference Shares:
During the year 30,00,000, 1% Redeemable Non-Convertible Preference
Shares of Rs. 10/- each at a premium of Rs. 90/- per share aggregating to Rs.
30 crore allotted to ICICI Bank Ltd, carrying divided at @ 1% per annum
were redeemed by your Company on 9th December, 2010 @ Rs. 136 per
preference share. The aforesaid preference shares were redeemed by
utilizing share premium.
RESOURCE MOBILISATION
The Indian economy however started showing revival during the latter
half of the year. Due to Inflationary pressures, Reserve Bank of India
had to tighten the monetary policy by increasing the key interest
rates. The Company's average cost of borrowings for the year was 10.70%
as against 10.97% in the previous year.
Subordinated Debt:
During the year, your Company raised Rs. 500 crore through the issue of
long-term Unsecured Redeemable Non-Convertible Subordinated Debentures.
The subordinated debt was assigned an 'AA' rating from both CARE and
Brickworks.
As at 31st March, 2011, your Company's outstanding subordinated debt
stood at Rs. 580 crore. The debt is subordinated to present and future
senior indebtedness of your Company and has been assigned the highest
rating by CARE and Brickworks. Based on the balance term to maturity,
as at 31st March, 2011, Rs. 580 crore of the book value of subordinated
debt is considered as Tier II under the guidelines issued by the
National Housing Bank (NHB) for the purpose of capital adequacy
computation.
Non-Convertible Debentures (NCD) :
During the year, your Company issued NCDs amounting to Rs. 585.00 crore
on a private placement basis. The Company's NCD issues have been listed
on the Wholesale Debt Market segment of the NSE. The Company's NCDs
have been assigned the highest rating of 'AA' by both CARE and
Brickworks. As at 31st March, 2011, NCDs outstanding stood at Rs. 1190.67
crore.
Commercial Paper:
The Commercial Paper (CP) programme of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the highest rating of P1 (P One Plus) having validity period
of twelve months. During the year your Company issued CPs to the extent
of Rs. 580 crore in two tranches and placed them with investors at the
most competitive rates of interest. As at 31st March, 2011, commercial
papers outstanding stood at Rs. 97.49 crore.
Loans from Banks:
As part of its liability management, your Company endeavors to
diversify its resource base in order to achieve an appropriate maturity
structure and minimize the weighted average cost of borrowed funds.
During the year under review, fresh term loans of Rs. 4,559.12 crore were
availed from the commercial banks and financial institutions, taking
the total term loan outstanding to Rs. 11,099.01 crore
Refinance from National Housing Bank (NHB) :
NHB has an internal rating mechanism for Housing Finance Companies
(HFCs) and your Company has been assigned the highest rating for its
refinance schemes by NHB. During the year, your Company has drawn
refinance amounting to Rs. 100 crore under NHB's Refinance Scheme to
Housing Finance Companies, 2003.
Deposits:
Deposits continued to grow during the financial year under review
despite strong competition from banks. DHFL deposit portfolio has
reached Rs. 557 crore as on 31st March 2011 with the customer base of
44,000. The year on year the net inflow of Company's Fixed Deposit was
Rs. 377 crore through 22,000 new accounts of which new Trust Deposit was
Rs. 200 crore through 1144 accounts. Your Company effected revision in
interest rates on deposits during the year in line with market
conditions.
Despite the 2nd half of the last financial turning quite unfavourable
leading to repayment of Rs. 50 crore of deposits, thanks to focused
efforts made by the Company with its agents, Company's deposit products
continue to be a preferred investment for households and trusts.,
DHFL's deposit portfolio has grown from Rs. 182.15 Crore in 31st March,
2010 to Rs. 557 Crore as on the 31st March, 2011, expanding the deposit
base from 21,000 in 31st March, 2010 to 44,000 in 31st March, 2011.
During the year Company initiated the growth strategy for mobilization
of fixed deposit by introduction of ECS for periodical interest w.e.f
1st of April, 2010, which cover 95% of non cumulative depositor.
During the year under review your Company launched Aashray Deposit
Plus, 20 Months and 30 Months Schemes, 365 Trust Deposit and 400 days
Deposit Schemes.
CARE and Brickworks have, reaffirmed their CARE 'AA ' and BWR FAAA
rating respectively for DHFL's deposits. This rating represents
'highest safety, attractive returns and impeccable service standards'
as regards timely repayment of principal and interest.
Unclaimed Deposits:
As of March 31, 2011, public deposits amounting to Rs. 3.67 crore had not
been claimed by 697 depositors. Since then, 240 depositors have claimed
or renewed deposits of Rs. 1.82 crore. Depositors were intimated
regarding the maturity of deposits with a request to either renew or
claim their deposits.
CREDIT RATING
Your Company has received a P1 (pronounced as 'P one plus')credit
rating from CRISIL for our short term debt (up to Rs. 1,500 crore) which
indicates strong capacity for timely payment of our financial
commitments. Your Company has also received ratings from CARE as CARE
AA (FD) credit rating indicating 'high safety' and BWR FAAA credit
rating indicating 'outlook stable' for our fixed deposits (up to Rs.
1,000 crore). With respect to our non-convertible debentures, we have
received a CARE AA (FD) credit rating indicating 'high safety' (non-
convertible debentures up to Rs. 1,190.67 crore, of which Rs. 585 crore was
issued as at 31st March, 2011) and a BWR AAA indicating 'outlook
stable' (non-convertible debentures up to Rs. 1,000 crore). Our Company
has also received a CARE AA rating for our redeemable preference shares
and for our subordinate debts.
CAPITAL ADEQUACY
Your Company is presently required by the NHB to maintain a minimum
capital adequacy of 12% on a stand-alone basis. In addition, the NHB
also requires that our Company transfers 20% of its annual profits to a
reserve fund. In line with international norms, the RBI has also
reduced the risk weight on individual housing loans to 50% for banks.
The following table sets out our stand-alone capital adequacy ratios as
at March 31 2009, 2010 and 2011.
Particulars As on 31st March
2011 2010 2009
Capital Adequacy 19.39% 17.26% 16.21%
Ratio (Stand-alone)
Your Company's capital adequacy ratio has followed a general increasing
trend during the three fiscal years ended 31st March, 2011. Your
Company's stand-alone capital adequacy ratio was at 19.39% as on 31st
March, 2011, which we believe provides an adequate cushion to withstand
business risks and is above the minimum requirement of 12% stipulated
by the NHB.
NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY
Your Company scrupulously adhered to the prudential guidelines for
Non-Performing Assets (NPAs), issued by the National Housing Bank (NHB)
under its Directions of 2010, as amended from time to time As per the
prudential norms prescribed by NHB, an asset is a non-performing asset
(NPA) if the interest or principal installment is overdue for 90 days.
HFCs have to set aside 2 per cent of the outstanding amount of teaser
loans as provisions. For other housing loans, the NHB has mandated
provisioning of 0.2 per cent by 31st March and 0.4 % by 30th September
depending on the ageing of such overdues. As per the prudential norms,
the income on such NPAs is not to be recognised.
The Non Performing Assets (NPA) consisting of the principal loans
outstanding where payments of EMI/PEMI were in arrears for 90 days or
more amounted to Rs. 94.29 crore. As per the prudential norms prescribed
by NHB, the Company is required to carry a contingency provision of Rs.
36.42 crore in respect of Non Performing Housing Loan, Non Housing
Standard Assets and other loans. However, as a matter of prudence, over
the years, your Company has been transferring additional amounts to
provision for contingencies. Provision for contingencies has been
further strengthened during the year by a transfer of Rs. 9.00 crore,
taking the total provision to Rs. 45.35 crore. With these provisions,
your Company has not only provided for the standard non-housing loan
assets at the prescribed rate of 0.40% but also provided fully for NPAs
of Rs. 94.29 crore. As a result, your Company's net NPAs stood at 0.10%
(0.73%) of the outstanding loans of Rs. 14,111.21 crore as at 31st March,
2011.
The Securitizations and Reconstructions of Financial Assets and
Enforcement of Security Interest Act 2002 (SARFAESI) has proved to be a
useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
individual and corporate defaulters.
BRANCH EXPANSION & BUSINESS TIE-UP
Your Company has a strong marketing and distribution network, with a
presence at 193 locations throughout India as on 31st March, 2011
including 100 branches and 67 service centers and 26 camp locations
spread across the length and breadth of India. Additionally, your
Company has international representative offices located in London and
Dubai to cater to the needs of non-resident Indians. Your Company has
entered into tie-ups with public sector banks ("PSBs") including Punjab
& Sind Bank to penetrate the northern Indian region, United Bank of
India to penetrate the eastern Indian region and Central Bank of India
across pan India. DHFL's tie-ups with PSBs provide us with access to
their customer database and extensive branch network. Our strong
network coverage is designed to provide increased penetration to cater
to the evolving needs of our existing customer base and tapping a
growing potential customer base throughout India.
INVESTMENTS
The Investment Committee constituted by the Board of Directors is
responsible for approving investments in line with limits as set out by
the board.
The decisions to buy and sell upto the approved limit delegated by the
board are taken by the Chairman & Managing Director, who is assisted by
three Senior Executives. 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
NHB.
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 and short term deposits with banks.
During the year, your Company earned Rs. 6.85 lacs by way of Income from
Mutual funds and Rs. 7.81 crore by way of interest on deposits placed
with banks. At the end of the year, your Company maintained Rs. 86.03
crore by way of short term deposits with banks.
As per NHB guidelines, HFCs 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 31st March, 2011,
your Company has invested Rs. 30.20 crore in approved securities
comprising of government securities, government guaranteed bonds and
NHB bonds. It is maintained within the limits prescribed by NHB.
Acquisition of Deutsche Postbank Home Finance Limited ("DPHFL"):
During the year, your Company along with Wadhawan Housing Private
Limited, M/s. Caledonia Investment Plc, U.K and Amber 2010 Ltd., has
acquired from BHW Holding AG, Germany 100% equity stake in Deutsche
Postbank Home Finance Limited ("DPHFL"), a Housing Finance Company
registered with the National Housing Bank. The business acquisition was
made by entering into Share Sale Agreement for a consideration of Rs.
1079 crore.
Your Company acquired 67.56% equity stake in DPHFL which is eventually
held through its a special purpose vehicle company i.e. DHFL Holdings
Private Limited (a 100% subsidiary company) and the balance 32.44% has
been acquired by other purchasers i.e. Wadhawan Housing Private
Limited, Caledonia Investment Plc, U.K and Amber 2010 Ltd.
INSURANCE OF PROPERTY
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate even of such incidents.
The employees of the Company are covered under the mediclaim facility
against hospitalization.
DIRECTORS' AND OFFICER LIABILITIES
This policy covers the Director's and officer of the company against
the risk of third party actions arising out of their actions
/directions which may have resulted in financial loss to any third
party. The Company has appropriately insured itself to mitigate such
risk coming from any third party
INSURANCE COVERAGE TO BORROWERS
All the borrowers of the company were insured against accidental death,
Property Insurance & Loss of Employment up to 3 EMI's by ICICI Lombard
GIC.
Your Company has tied up with market leader, ICICI Prudential LIC for
'Home Assure' product for Mortgage Reducing Term Assurance, whereby the
borrower gets insurance cover on his / her life to the extent of
outstanding home loan amount as on the day of death. The primary
objective is to ensure protection of the loan portfolio from default
due to sudden demise of the borrowers.
Your Company insured close to 87% of the new home loan portfolio
acquired in the year 2010-11. With consistent growth in retail
Insurance business your company has taken a big leap in Retail Cross
sell business this year with a growth of 305% over the last fiscal
year. Over all insurance Fee income growth in FY 2010-11 was 147% over
2009-10.
NHB GUIDELINES
The Company has been following the various Circulars, Notifications and
Guidelines issued by National Housing Bank (NHB) from time to time.
The Circulars and the Notifications issued by NHB are also placed
before the Board at regular intervals along with the compliance of the
same.
During the year under review, NHB has conducted an inspection of the
Company under Section 34 of the NHB Act, 1987 and Company has furnished
the replies to the same.
CODES AND STANDARDS
During the year under review, the National Housing Bank has issued
revised comprehensive Know Your Customer (KYC) Guidelines and Anti
Money Laundering Standards in the context of recommendations made by
the Financial Action Task Force on Anti Money Laundering Standards and
on Combating Financing of Terrorism Standards. During the year, the
Board reviewed and noted the amendments to the Company's KYC and
Prevention of Money Laundering Policy as stipulated by NHB. Your
Company has adhered to the compliance requirements in terms of the said
policy for monitoring and reporting cash/suspicious transactions.
The Fair Practices Code framed by NHB seeks to promote good and fair
practices by setting minimum standards in dealing with customers,
increase transparency so customers have a better understanding of what
they can reasonably expect of the services being offered, encourage
market forces through competition to achieve higher operating
standards, promote fair and cordial relationships between customers and
the housing finance company and foster confidence in the housing
finance system. During the year, your Company has adhered to the Fair
Practices Code as approved by the Board of Directors.
Code of Conduct:
Your Company has adopted a revised Code of Conduct for its Board
Members and Senior Management personnel. The code of conduct has also
been posted on the official website of the Company. A copy of the code
of conduct has been circulated to the directors and senior Management.
The Declaration by the Chairman & Managing Director of the Company
regarding compliance with the Code of Conduct for Board Members and
Senior Management is annexed with the Corporate Governance report
Risk Management Framework:
Your Company has a Risk Management Framework, which provides the
mechanism for risk assessment and mitigation. The ALCO Management
Committee (AMC) comprises the Chairman & Managing Director, the Chief
Executive Officer, Chief Operating Officer and members of senior
management.
During the year, the AMC reviewed the risks associated with the
business of your Company, its root causes and the efficacy of the
measures taken to mitigate the same. Thereafter, the Board of Directors
also reviewed the key risks associated with the business of your
Company, the procedures adopted to assess the risks and their
mitigation mechanisms.
BRANDING
We believe that the 'DHFL' brand is one of the most important
intangible assets that we own. During this fiscal year, the Company
was, by the following bodies in recognition of Company's operation and
conduct of business:
- Ranked as "POWER BRAND" amongst the top 200 brands in India by M/s
Planman Marcom,
- Ranked at the best company to work for in India by Times of India 's
survey of "Best Companies to Work For"
- Greentech Foundation, India has chosen the Company for the
prestigious Greentech HR Excellence Award.
- has been chosen as "The Newsmaker of the Year" by a leading real
estate publication à Realty Plus.
We had over a million visits to our website on business and property
related topics on our website www.dhfl.com during the year. We
continued to have leadership presence at premier housing finance
industry and real estate property events.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility is a sustained activity wherein an
organization and its employees take up social causes with a view to
serve the society. The real work in CSR extends beyond the statutory
obligations and sees organizations and its people voluntarily taking up
programmes and initiatives to improve the quality of life of the local
community and also the society at large.
Your Company in association with Mumbai Mobile Crèches participated in
Standard Chartered Mumbai Marathon - 2010 on 16th January, 2011.
Your Company had taken initiatives to help support the cause of
children of construction workers at the construction sites in Mumbai.
In line of agreement with Concern India Foundation (CIF), based in
Mumbai, your Company continues to support for promoting activities
linked to upliftment of members belonging to weaker sections of
society. Concern India Foundation is undertaking the activities linked
to the following major issues:
- Education
- Community Development
- Health
- Environment
The financial support to Concern India Foundation will directly benefit
the following important constituents of the society:
- Women
- Children
- Senior citizens
Education Trust
Your Company also provides learning assistance to its employees who
aspire to undertake higher education through its trust "Late Shri
Rajesh Kumar Wadhawan DHFL Employees Welfare Trust". Besides
education, the said Trust also support exigency family medical support,
marriage support for deserving employees of DHFL across locations
especially the staff in lower grades who runs out of cash in case of
any exigencies and with such other objects of charitable nature.
SECRETARIAL AUDIT
As directed by the Securities and Exchange Board of India (SEBI)
Secretarial Audit is being carried out at the specified period, by
practicing company secretary. As a measure of good corporate governance
the Company had appointed M/s. Aabid & Co, practicing company
secretaries to conduct Secretarial Audit of the Company. The
Secretarial Audit Report for the Financial Year ended 31st March, 2011
is provided in this Annual Report.
HUMAN RESOURCES
Improved performance and renewed commitment of the employees apart from
improvement in various systems like Performance Management have
triggered the consolidation, diversification and growth of your
Company.
Your Company has covered considerable ground in establishing itself as
a preferred employer in the Indian Housing Sector. During the year,
your Company managed to attract talent from leading banks,
multinational organizations and leading business schools.
A study conducted jointly by The Economic Times & 'Great Place to Work
Institute' recognizing India's best companies to work for in 2010 rated
your Company among the 100 Best Companies.
As a part of this re-positioning, your Company engaged the services of
globally renowned firm - Price Watehouse Cooper and IBM in reorienting
and restructuring the HR systems and processes including Organization
Diagnostics & Structuring, Performance Management System Design &
Implementation. Thereby, your Company is realigning the compensation in
line with the market, in phases and has also revamped the Performance
Management System in accordance with the business imperatives.
Your Company has made an endeavour to constantly upgrade the knowledge
and enhance the skill-set of the employees.
As part of the development initiatives, in-house functional and
behavioral interventions were organized at regular intervals. Employees
were nominated to leading institutes for Executive Development Programs
and Seminars/Workshops conducted by various Chambers of Commerce to
keep them abreast with the latest developments in the financial as well
as other sectors.
The work force strength of your Company as on 31st March 2011 was
1,137. The total work force cost during the year has gone up by 57.31%
from Rs. 39.05 crore to Rs. 61.43 crore. This is mainly due to the increase
in work force to meet the requirements on account of significant
expansion in terms of geography as well as in business volumes and the
salary revisions effected during the year. Few additional positions are
added for meeting business requirements and to give greater focus to
functions like Credit Appraisal and Operations.
Your Company has entered into Deed of Trust with Life Insurance
Corporation of India which covers the Company's employees under the
group gratuity schemes with the Life Insurance Corporation of India
('LIC'). The schemes are defined benefit schemes and are funded in line
with the LIC's actuarial valuation carried out at year end.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed thereunder, the names and other
particulars of employees are set out in the annexure to the Directors'
Report.
DHFL EMPLOYEES STOCK OPTION SCHEME (ESOS)
Besides the existing DHFL Employees Stock Option Scheme 2008 and 2009,
the Remuneration & Compensation Committee, during the year under
review, considered and approved grant of 12,34,670 (out of 12,75,000)
Stock Options available for grant, to the employees of the Company, at
the pre-determined price under the DHFL ESOS Scheme's à 2009 Plan II.
The Remuneration & Compensation Committee of the Board of Directors has
also considered re-issue of 1,45,800 stock options out of 1,70,000
stock options, which were cancelled/lapsed without being exercised and
available under ESOSÃ2008 PlanÃI, to the employees, at the
pre-determined price under the DHFL ESOS Scheme's Ã2008 Plan-I.
The particulars of options issued under the said Plan as required by
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 are appended as Annexure and forms part of this
report.
INFORMATION TECHNOLOGY AND COMMUNICATIONS
Information Technology department has set up 'Central Integrated
Information System (CIIS)' which is an umbrella providing solutions to
almost all areas of activities of your Company.
During the year 2010-11, apart from upgrading the existing software
applications with enhanced/added features to meet the current and
emerging business needs, certain new application systems were
implemented. The new systems developed and implemented include a system
of on-line monitoring of loan assets. The Asset-liability system was
upgraded to facilitate auto-generation of gap report on daily basis for
major assets and liabilities. System for projecting and analyzing
future cash inflows and outflows under various financial, market and
business scenarios has been developed which also facilitates gap
analysis. IT infrastructure platform like VPN (Virtual Private
Network), routers, switches and firewalls were upgraded to enhance the
performance and security of the network. The e- mailing facility was
upgraded with an efficient and improved solution. With an objective to
strengthen and facilitate technological support in the organization, IT
hardware and software infrastructure is being upgraded.
IT security mechanism was also strengthened to prevent virus attacks
and unauthorized access. The initiative to create a paperless
environment in the Company was further taken forward by using Document
Management System, scanning and e- storing large volume of documents.
SUBSIDIARY COMPANIES
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any members of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open to inspection at the Registered Office
of the Company and that of the respective subsidiary companies. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies. The same will also be
hosted on our website, www.dhfl.com.
Your Company has 5 subsidiaries, namely, DHFL Vysya Housing Finance
Limited, Deutsche Postbank Home Finance Limited, Aadhar Housing Finance
Private Limited, DHFL Property Services Limited and DHFL Holdings
Private Limited.
During the year under review your Company subscribed equity shares in
the subsidiary companies. The details are as given below :
- 21,60,10,000 equity shares of Rs. 10/- each at par in DHFL Holdings
Private Ltd.
- 5,00,00,000 equity shares of Rs. 10/- each at par in Aadhar Housing
Private Ltd.
Details of aforesaid subsidiaries companies are covered in Management
Discussion and Analysis Report forming part of the Annual Report.
Review of Subsidiary Companies:
DHFL Vysya Housing Finance Ltd. (DVHFL) is a housing finance company
registered with NHB and has operations primarily in the States of
Karnataka, Andhra Pradesh, Tamil Nadu and Maharashtra.
For the year ended March, 31, 2011, DVHFL has reported a profit after
tax of Rs. 12.11 crore as compared to Rs. 8.55 crore in the previous year.
The Board of Directors of the subsidiary company has declared an
interim dividend of 15% and has recommended a final dividend of 10%
making the total dividend to 25%.
DHFL Property Services Limited [DPSL] a wholly- owned subsidiary of the
Company offers real estate/property services under one roof, as a value
added services along with housing. It also provides Real Estate &
Property Advisory Services to leverage wide database of customers and
relationship with developers and builders.
The operations of the said company began during the financial year
2009-10. For the year ended March, 31, 2011, DPSL has reported a profit
after tax of Rs. 32 crore as compared to Rs. 18 crore in the previous year.
DHFL Holdings Private Limited [DHPL] was incorporated on 3rd January,
2011 and is a wholly- owned subsidiary of the Company. The subsidiary
manages investments in equity, acquire and hold shares, stocks,
debentures, debenture stock, bonds mutual funds, real estate, fixed
income and structured products.
Aadhar Housing Finance Private Limited - Your Company, along with its
subsidiary DHFL Vysya Housing Finance Ltd., promoted and incorporated a
new company "Aadhar Housing Finance Private Limited" [Aadhar Housing]
as a Housing Finance Company registered with a National Housing Bank
(NHB) with equity participation agreement between your Company, DHFL
Vysya Housing Finance and International Finance Corporation Ã
Washington in ratio of 50:30:20 respectively. Aadhar Housing commenced
its operations on 8th February, 2011 in the State of Uttar Pradesh, in
Lucknow and it further proposes to market retail housing loans for the
low income segment of the Indian population in the states of Uttar
Pradesh, Madhya Pradesh, Bihar, Chhatisgarh, Jharkhand and Orissa.
Deutsche Postbank Home Finance Ltd.
Deutsche Postbank Home Finance Ltd. (DPHFL), was incorporated in India
on 2nd March 1995, a National Housing Bank (NHB) registered housing
finance company having its registered office in New Delhi & Corporate
Office in Gurgaon. Deutsche Postbank Home Finance Limited has a network
of 40 Branches and sales offices across India offices across India.
In terms of Share Sale Agreement DHFL acquired 67.56% equity stake in
Deutsche Postbank Home Finance Limited (DPHFL) which is held through
its 100% owned SPV and the balance 32.44% has been acquired by other
purchasers i.e. Wadhawan Housing Private Limited, Caledonia Investment
Plc, U.K and Amber 2010 Ltd.
CONSOLIDATION OF ACCOUNTS
The audited Consolidated Accounts and Cash Flow Statement, comprising
of DHFL and its subsidiary Companies namely DHFL Vysya Housing Finance
Ltd., DHFL Property Services Ltd, DHFL Holdings Pvt. Ltd., Aadhar
Housing Finance Pvt. Ltd. and Deutsche Postbank Home Finance Ltd., are
annexed to this Annual Report. The Auditors' Report on the Consolidated
Accounts is also attached. The Consolidated Accounts have been prepared
in accordance with the Accounting Standards prescribed by the Institute
of Chartered Accountants of India in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO
The particulars regarding foreign exchange earnings and expenditure
appear as Item No. BÃ41 in the 'Other Notes to Accounts'. (Schedule Q)
Since the Company is not engaged in any manufacturing facility, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 are not applicable.
DIRECTORS
In accordance with the provisions of the Companies Act, 1956 read with
the Clause 158 of the Articles of Association of the Company, Shri Ajay
Vazirani and Shri V. K. Chopra, directors of your Company retire by
rotation and being eligible; offer themselves for re-appointment at the
ensuing Annual General Meeting. Necessary resolutions for the
re-appointment of the aforesaid directors have been included in the
notice convening the ensuing AGM.
Brief resume of the Directors proposed to be appointed / re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership / chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges in India, are provided in the Report on
Corporate Governance forming part of the Annual Report. All the
directors of the Company have confirmed that they are not disqualified
for being appointed/ reappointed as directors in term of Section
274(1)(g) of the Companies Act, 1956.
AUDITORS
M/s. B.M. Chaturvedi & Co., Mumbai, Chartered Accountant [Firm
Registration No.114317W], retire at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. M/s. B.M.
Chaturvedi & Co., have sought reappointment and confirmed that their
reappointment shall be within the limits of Section 224 (1B) of the
Companies Act, 1956. The necessary eligibility certificate under
Section 224(1B) of the Companies Act, 1956, was received from them.
M/s. B. M. Chaturvedi & Co. was earlier a proprietary concern and has
been converted into partnership concern by including new partners. The
Audit Committee and Board of Directors recommend the appointment of
M/s. B.M. Chaturvedi & Co., Chartered Accountants, as the auditors of
your Company.
AUDITORS REPORT
The notes to the accounts referred to in Auditors Report are
self-explanatory and therefore do not call for any further comments.
The Company has also internal audit system implemented by in-house
department and supported by various independent Chartered Accountants
firms appointed by Concurrent Auditors to carry out concurrent Audit of
the branches.
Systems and procedures are being upgraded to provide checks and alerts
for avoiding/detecting fraud arising out of misrepresentation given by
borrower/s while availing the housing loans.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited accounts
containing the Financial Statement for the year ended 31st March 2011
are in conformity with the requirements of the Companies Act, 1956 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 are audited by the Statutory Auditors, M/s.
B. M. Chaturvedi & Co., Chartered Accountants, Mumbai.
In accordance with the provisions of section 217 (2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
directors state that:
(i) in the preparation of accounts, the applicable accounting standards
have been followed;
(ii) they have 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 31st March, 2011 and of the profit of the Company for
year ended on date;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities and
(iv) they have prepared the annual accounts on a going concern basis.
CORPORATE GOVERNANCE
Your Company has complied with all the provisions of Corporate
Governance as prescribed under the amended Listing Agreements of the
Stock Exchanges, with which the Company's shares are listed. Pursuant
to Clause 49 of the Listing Agreements with the Stock Exchanges, the
followings form part of this Annual Report :
(i) Chairman & Managing Director's declaration regarding compliance of
Code of Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion & Analysis
(iii) Report on the Corporate Governance;
(iv) Auditors' Certificate regarding compliance of conditions of
Corporate Governance.
Future Outlook
Housing / real estate sector which is slowly coming out of the mid 2008
slump, has received good support from Union Budget 2011- 2012. While
the budget has encouraged housing sector finance as given below:
- Existing scheme of interest subvention of 1 per cent on housing loan
further liberalized.
- Existing housing loan limit enhanced to Rs. 25 lakh of dwelling units
under priority sector lending.
- Provision under Rural Housing Fund enhanced to Rs. 5,000 crore.
With the recent recovery in the demand for housing and real estate
sectors, activities in the housing, real estate sectors and
infrastructure sectors are expected to remain healthy in the coming
quarters. This will lead to a rise in credit demand for housing. The
liquidity conditions of your Company have remained comfortable during
the year, so far. Your Company has successfully raised funds from bank
as well as non bank sources. Your Company does not expect any pressure
on the liquidity front in the months to come either. This is because
liquidity conditions in the banking system will continue to remain
comfortable. A healthy demand for credit for home loan seeks coupled
with comfortable liquidity conditions will lead to a rise in
disbursement
ACKNOWLEDGMENTS
Your Directors wish to place on record their gratitude to the NHB, the
Company's Customers, Bankers, Shareholders, Debenture holders,
Depositors and others for their assistance and co- operation and who
have helped the Company in its endeavour. The Board also places on
record its deep appreciation for the excellent support received from
the employees at all levels during the year. The Directors also like
to thank The Stock Exchange, Mumbai, the National Stock Exchange, NSDL,
CDSL and the Credit Rating Agencies for their co-operation.
for and on behalf of the Board
Kapil Wadhawan
Chairman & Managing Director
Dated: 13th May, 2011
Place : Mumbai
Mar 31, 2010
The Directors are pleased to present the 26th Annual Report on the
business and operations of your Company together with the Audited
Statement of Accounts for the year ended 31st March,2010.
FINANCIAL RESULTS
The Financial performance of your Company for year ended March 31, 2010
is summarized below:-
(Rupees in Crore)
2009-2010 2008-2009
GROSS INCOME 992.55 692.46
Less : Interest 669.84 492.91
Overheads 109.19 67.02
Provision for Contingencies 8.50 6.00
Depreciation 2.83 2.42
Profit Before Tax 202.19 124.11
Less : Provision for taxation 51.50 32.35
Profit After Tax 150.69 91.76
Less Prior Period Adjustment Nil 5.44
Add : Balance b/f from the previous year 24.74 21.20
Surplus available for appropriations 175.43 107.52
APPROPRIATIONS
Transferred to Special Reserve under
Section 36(1 )(viii) of the Income
Tax Act, 1961 35.00 20.00
Transferred to General Reserve 75.00 45.00
Dividend on Preference Shares 0.03 0.07
Dividend for Earlier Year 5.34 Nil
Proposed Equity Dividend 24.61 15.13
Tax on proposed Dividends 5.09 2.58
Balance carried over to Balance Sheet 30.36 24.74
Total 175.43 107.52
PERFORMANCE
The financial year 2009-10 which is silver jubilee year of your
Companys Operation, has indeed proved to be a momentous year and your
Company has further consolidated its position in the housing finance
industry. The year under review has been a challenging one. Indian
economy growth slowed to slightly less than 7% in the fiscal year
2009-10 due to impact of the global downturn. The core real estate /
housing sector has experienced series of setbacks in 2008. While the
demand for housing has been stagnant, high costs of construction, major
liquidity crunch in the banking system and high interest rates on loans
have caused the turbulence in the sector. But towards the latter part
of 2008, the sector witnessed correction in prices between 10% to 30%
in far metros depending on the location. With stimulus package and
fiscal concession given to the Housing Sector, the Housing Finance
Industry witnessed a hectic activity with the Banks, Financial
Institutions and other corporate bodies joining the fray in a big way,
Developers too have shifted in developing and offering affordable
homes, which will be realistic owing to interest rates and inflation
coming down. However, with stiff competition and falling rates of
interest, the trend of stagnant demand for housing as end-buyers do not
have enough money to even buy affordable homes due to uncertainty in
the markets and economic turmoil.
Your Company registered a remarkable growth in its operations. The
operating profit before charging depreciation and tax amounted to Rs.
205.02 crore as against Rs. 126.53 crore in the preceding year;
representing a rise of 62.03% Profit After Tax (PAT) went up by 64.22%
to Rs 150.69 crore from Rs. 91.76 crore in the previous year. The EPS
improved to Rs 1 9.78 as against Rs. 1 5.1 5 of the previous year.
Your Companys core business is providing housing finance and also
carries on business vertical such as Insurance, Technical Consultancy
and Project Management Services and Property Services. These vertical
of the business are operated through Companys subsidiary /associate
companies which have strong synergies with the Company and offer
customer wide range of financial products and services under DHFL
brand. Detailed review of the operations of each subsidiary companies
are presented in the respective Companys Directors Report, a brief
overview of the major developments thereof is also presented in the
Management Discussion and Analysis, forming part of this Report.
Lending Operations
The cumulative loans disbursement of your Company as at the end of
financial year 2009-10 was Rs. 13234.22 crore as compared to Rs.
9368.66 crore in the previous year. The housing loans/other loan
sanctioned during the year ended 31st March, 2010 were to the extent to
Rs. 5273,96 crore as against Rs. 2698.18 crore sanctioned during the
previous year.
Disbursement
The loan disbursed during the year ended 31 st March, 2010 was to the
extent of Rs. 3805.50 crore as against Rs. 2266.02 crore disbursed
during the previous year.
DIVIDEND
Keeping in view excellent financial results and fund requirements in
the near future, the Board has recommended a dividend of Rs. 3/-
pershare [30%] on 8,20,26,544 equity shares of Rs.10/- each for the
financial year ended 31 st March, 2010, subject to approval of the
shareholders at the ensuing Annual General Meeting. The total outgo on
account of dividend (including dividend distribution tax) will be Rs.
29.70 crore as against Rs. 17.71 crore in the previous year.
Your Company paid dividend of Rs. 5.34 crore and Rs. 0.91 crore as tax
on the distribution of above dividend to new shareholders on account of
Final Dividend for the year 2008-09 as required under the Listing
Agreement as those shares were allotted after 31 st March, 2009, but
prior to record date for the dividend payment.
Equity shares that may be allotted on allotment of shares under QIP,
Preferential issue and exercise of options under Employee Stock Option
Scheme before the date of the book closure for payment of dividend will
rank pari passu with the existing shares and be entitled to receive the
dividend.
SHARE CAPITAL
During the year, your Company had focused on measure to improve its net
worth.
Pursuant to the special resolution passed at the Extra - Ordinary
General Meeting of the Company held on Saturday, 27th, June, 2009, your
Company issued and allotted following securities.
Qualified Institutional Placement:
During the year under review, your Company successfully completed issue
of 1,60,12,231 equity shares of Rs. 1 0/- each at a price of Rs. 141/-
per equity share, including a premium of Rs. 131/- per equity share,
aggregating Rs. 225.77 crore to Qualified Institutional Buyers (QIBs)
as per Chapter Xlll-A of erstwhile SEBI (DIP) Guidelines, 2000, through
the QIR The QIP was opened for subscription to QIBs on 29 June 2009 and
closed on 30th June, 2009 and the same was allotted on 7th July, 2009.
The BSE and the NSE had given trading permission for the equity shares
issued to QIBs on 9th July, 2009.
Equity Shares on Preferential Allotment Basis:
To further strengthen the Companys financial position and to generate
resources, inter alia, for investing in the businesses of the Company,
the Company issued and allotted in 16th July, 2009, 53,50,000 equity
shares of Rs.10 each at a premium of Rs. 131/- each aggregating Rs.
75.44 crore to promoters and a promoter group entity on a preferential
basis in terms of the relevant Guidelines for Preferential Issues,
issued by the Securities and Exchange Board of India. The equity shares
allotted as aforesaid Promoters are locked-in for a period of three
years.
Employee Stock Option Scheme - 2008
During the year under review, the Company allotted in four [4] tranches
1,41,338 equity shares of Rs.10/- each upon exercise of stock options
by the eligible employees under the Employee Stock Option Scheme-2008.
In view of above, the issued, subscribed and paid-up equity share
capital increased from 6,05,22,975 equity shares of Rs.10 each as on
March 31, 20009 to 8,20,26,544 equity shares of Rs. 10/- each as on
March 31,2010..
Details of the shares issued and allotted under ESOS, as well as the
disclosures in compliance with Clause 12 of the Securities and Exchange
Board of India (Employee Stock Option Scheme and Employee Stock
Purchase Scheme) Guidelines, 1 999 are set out in Annexure to this
Report.
The Company has paid the listing fees,payable to the BSE and the NSE
for the financial year 2009-10
Further Issue of Shares
The Board of Directors of your Company by its resolution dated 21st
April, 2010 has resolved to augment resources of your Company by way of
issue of equity shares to (1) Qualified Institutional Buyers (2)
Caledonia Investments Pic (3) Promoter Group Entities up to an amount
of Rs. 500 crore, subject to the approval from the members of the
Company in the Extra Ordinary General meeting scheduled to be held on 1
8th May, 201 0.
Rights Issue
The proposal of raising of funds during the year through a Rights Issue
for part funding the Companys various ongoing/proposed projects was
dropped in view of the then prevailing market conditions. The Company
has neither filed offer document nor announced any Record date for the
same.
Commercial Paper
The Commercial Paper (CP) programme of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the highest rating of PI + (P One Plus) having validity period
of twelve months. As at 31st March 201 0 your Company had issued CPs to
the extent of Rs. 300 crore and placed them with investors at the most
competitive rates of interest. The subscription amount of the
Commercial Papers is utilized for working capital.
FUNDS RAISING
Term Loans
As part of its liability management, your Company endeavors to
diversify its resource base in order to achieve an appropriate maturity
structure and minimize the weighted average cost of borrowed funds.
During the year under review, fresh term loans of Rs 3243.84 crore were
availed from the Banks and Financial Institutions, taking the total
term loan outstanding to Rs. 6539.89 crore. These loans were drawn at
varying spreads below the prime lending rates of the respective banks.
Refinance from National Housing Bank
During the year, your Company availed itself refinance facility of
Rs.780 crore. As on 31st March, 2010 refinance outstanding from NHB is
Rs. 1487.57 crore.
Non-Convertible Debentures
During the year, your Company issued secured, redeemable and
non-convertible debentures (NCDs) amounting to Rs. 225 crore through
private placement with institutional investors and mutual funds.
All the term loans and secured borrowings, are secured by way of the
first charge on all the movable and immovable properties of your
Company, both present and future and ranking pari-passu inter-se basis
in favour of all the secured lenders.
FIXED DEPOSITS
During the year under review, your Company has achieved phenomenal
growth in its Fixed Deposits Portfolio. The Outstanding Deposit as of
March 31, 2010 stood at Rs 182.16. crore compared to Rs.46.88 crore as
at 31st March, 2009, showing the growth level of 289% in FY 2009-1 0.
During the year under review around 13,000 New Depositors have shown
their confidence by investing in the Companys Fixed Deposit Scheme
taking the total number of Depositors to 21,910 Accounts. Your Company
now has on its panel most of the Top Line Corporate Brokers as
Intermediaries promoting its Deposit Schemes.
Being the year of Silver Jubilee Celebration and to reward the
confidence shown by the depositors, your Company has launched "Rajat
Jayanti Depositor Scheme" in July 2009, wherein all the existing
Deposits were given 25 basis point extra interest rates over and above
the existing rates. In the month of December 2009, "DHFL Swayamsiddha
Deposit Scheme" was launched targeting the Women Depositors. The Scheme
received an overwhelming response, mobilizing as on 31 st March, 201 0,
deposits of Rs. 1 2.28 crore in as many as 2209 Depositors.
Your Company has renewed the Permission of the Charity Commissioner,
Govt, of Maharashtra, for Accepting Deposits from Public Trusts. During
the Year, your Company has received BWR FAAA Rating from Brickwork
Ratings Agency, indicating Excellent Credit Quality & Highest Safety.
As on 31st March. 2010, 37 depositors had not claimed the deposits
amounting to Rs. 1 5.65 lakh. Depositors have been intimated regarding
the maturity of their deposits, with a request to either renew or claim
their matured deposits. Since then, 1 (one) depositor have either
renewed or claimed their deposits aggregating to Rs 1.50 lakh. The
fixed deposits accepted by your Company are secured appropriately to
the extent of floating charge created by way of Deed of Trust, as per
the guidelines issued by NHB.
CREDIT RATING
Your Company had received rating from CRISIL as PI + (pronounced as
P one plus) for the short- term debt issue, indicating the strongest
capacity for timely payment of the financial commitment.
Your Company continued to enjoy CARE AA+ (FD) rating from CARE for
Fixed Deposits and Secured Non-Convertible Debentures, indicating high
safety1.
Your Company also enjoys CARE AA+ rating from CARE for its redeemable
preference shares raised / to be raised to meet capital adequacy ratio.
Your Company has received a rating of CARE AA from CARE for its
subordinate debts.
CAPITAL ADEQUACY
During the year the capital adequacy ratio of the Company was at a
comfortable level of 1 7.26% as on 31 st March, 201 0 as against the
minimum requirement of 12% stipulated by the National Housing Bank
(NHB).
NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY
Your Company scrupulously adhered to the prudential guidelines for
Non-Performing Assets (NPAs), issued by the National Housing Bank (NHB)
under its Directions of 2001, as amended from time to time. During the
year under review your Company has made required provision for
contingencies in accordance with the guidelines on prudential norms
issued by the National Housing Bank
The amount of loans where the installments are outstanding for over 90
days as on 31st March, 2010, aggregate to Rs. 100.48 crore. The non-
performing loans amount to 1.1 6% of the total loan portfolio as
compared to 1.47% in the previous year. Your Company has initiated
various measures for speedy recovery and has also taken action under
the Securitization and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002 (SARFAESI) and is thus able
to take recovery action against the defaulters.
INVESTMENT
The Investment Committee constituted by the Company is responsible for
approving investment in line with limit as set out by the Board. The
decisions to buy and sell upto approved limit of Rs. 500 crore as
delegated by the Board are taken by the Chairman & Managing Director,
who is assisted by two senior executives. The investment functions are
carried out primarily to support the core business of housing finance
to ensure adequate levels of liquidity and to maintain statutory
liquidity.
Housing Finance Companies (HFCs) are required to maintain liquid assets
of 12.50% of the outstanding public deposits. Your Company continued
to maintain its statutory liquidity ratio (SLR) as stipulated by NHB.
Accordingly, your Company has made adequate investments in approved
securities and bank deposits as on March 31,2010 to meet the
requirement of SLR.
INSURANCE OF PROPERTY
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate even of such incidents.
The employees of your Company are covered under the medliclaim facility
against hospitalization.
INSURANCE COVERAGE TO BORROWERS
Your Company has tied up with Future Generali India Insurance Co. Ltd
for insurance of its housing loan products called Sampoorna Suraksha
Plan which covers the borrowers of the company as under:
(a) Accidental Insurance: Personal accident risk cover, free of cost
upto an amount of outstanding loan at any particular point of time
during the term/tenure of the term loan.
(b) Mortgaged Property Insurance: The property acquired out of loan,
for and upto an extent of the outstanding loan amount, under risk,
against fire, earthquake and allied perils affecting the concerned
property.
(c) Loss of Employment: Loss of job cover is upto three EMIs of loan or
a maximum of Rs 25,000/-, whichever is lower.
With the consistent growth in insurance business, your Company has
explored to cross sell as another revenue channel and has tied up as a
Corporate Agents with SBI Life Insurance Company for life products and
for non-life products with ICICI Lombard GIC. For safety of loan
portfolio, your Company has also entered into an arrangement with ICICI
Prudential LIC for mortgage linked term assurance product "Home
Assure". Insurance products are linked with home loans of customers,
both new and existing ones. Under this scheme, the borrower gets an
insurance cover on his life to the extent of the outstanding home loan.
This scheme has been introduced to ensure protection from loan default
to the families of deceased borrower. We have insured more than 70% of
our new portfolio acquired in 2009-10.
TECHNOLOGY
During the financial year 2009-1 0, your Company further strengthened
its IT infrastructure and systems to support its operations. It
upgraded its main data centre infrastructure. Connectivity to branches
was upgraded though the WAN system. New application software was
implemented to provide improved information flow to branches and to
further support the collection system.
In view of rapid expansion of business operations and its volume in all
its loan products, the present system was not able to cope with the
current business volume and as a part of implementation of software
programme, your Company has engaged IBM (I) Ltd for business process
re-engineering and to develop software applications as per the
Companys current need of business volume.
BRANCH EXPANSION & BUSINESS TIEUP
In order to increase its share of the housing finance business by
tapping underserved segments of the Indian economy, your Company is
expanding its pan-India presence by setting up new offices across
regions where the Company has been hitherto not present including
Northern and North Eastern India to meet target customers of LMI
segments. Your Companys presence includes those places where little or
no presence for other HFCs and private banks in India. The geographical
spread of the Company is based on both macro and micro economic factors
and since business spread is at outskirts of the cities, around 66% of
the business is generated from the total presence within 50 km radius.
To support the growth, Company has an integrated branch network at 93
branch office (including its representative office in London and Dubai)
71 Services Centres and 30 Camp Locations, 5 Zonal Offices, 7 Regional
Processing Units, and 2 alliance operations with nationalized banks
i.e. Punjab & Sind Bank and United Bank of
India which spread across the length and breadth of the country, has
resulted in optimization of its operational costs and has improved
delivery mechanism. Your Company has linked all branch offices to a
central database which helps in periodic assessment of loan portfolio
and provides specific advantages in terms of efficiency and cost
savings.
DEPOSITORY SYSTEM
As the members are aware the Companys share are compulsory tradable in
electronic form. As on 31st March, 2010 almost 98.98% of the Companys
total paid up capital -representing 8,1 1,93,408 equity shares are in
dematerialised form. In view of the numerous advantage offered by the
depository system members holding shares in physical mode are advised
to avail of the facility of dematerialization on either of
depositories.
HUMAN RESOURCES AND TRAINING
The nature of your Companys business requires trained and skilled
professionals. Your Company has been successful in attracting and
retaining highly qualified professionals, with impeccable professional
track record, by offering them a challenging work environment, coupled
with competitive compensation including Stock Ownership. Owner
mindset is the basic tenet which drives your Companys human resource
policy and this enables them to unleash their inner entrepreneurial
energy without compromising on team work and ethics.
Housing / Financial services is a knowledge intensive sector where
employee skills form a critical aspect in service delivery. Your
Company has developed comprehensive in-house training modules to make
sure that all employees understand your Companys vision, purpose and
imbibe the ethos of the organization. Emphasis is laid on On the Job
trainings where an experienced and senior person mentors the junior
executives In order to keep the employees abreast of the changing
expectation of a growth oriented organization, wide training sessions
were conducted across grades to prepare employees to bring about their
best.
Your Company has also put in place Human Resource Information
Management software People Konnect which automated the Human
Resources operations thereby reducing lead time. Employee skill
development and learning has always been the focus of your Company. In
order to ensure that the employees are well informed and have the
requisite knowledge about the operational norms and guidelines,
industry benchmarks etc, a knowledge management portal was implemented,
which also helps to track employee progress towards learning.
Apart from the above, various employee engagement activities were
undertaken to keep the employees involved in the day to day operations
of the Company. Employee reward and recognition programs were run
throughout the year.
The work force strength of your Company as on 31st March 2010 was 980.
The total work force cost during the year has gone up by 46.16% from
Rs. 28.40 crore to Rs. 39.05 crore. This is mainly due to the increase
in work force to meet the requirements on account of significant
expansion in terms of geography as well as in business volumes and the
salary revisions effected during the year. Few additional positions
are added for meeting business requirements and to give greater focus
to functions like Credit Appraisal and Operations.
During the year your company entered into Deed of Trust with Life
Insurance Corporation of India which covers the Companys employees
under the group gratuity schemes with the Life Insurance Corporation of
India (LIC). The schemes are defined benefit schemes and are funded
in line with the LICs actuarial valuation carried out at year end.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility is a sustained activity wherein an
organization and its employees take up social causes with a view to
serve the society. The real work in CSR extends beyond the statutory
obligations and sees organizations and its people voluntarily taking up
programmes and initiatives to improve the quality of life of the
community and also the society at large.
Your Company in association with Mumbai Mobile Creches participated in
Standard Chartered Mumbai Marathon - 201 0 on 1 7th January 201 0.
Your Company had taken initiatives to help support the cause of
children of construction workers at the construction sites in Mumbai.
In line of agreement with Concern India Foundation (CIF), based in
Mumbai, your Company continues to support for promoting activities
linked to upliftment of members belonging to weaker sections of
society. Concern India Foundation is undertaking the activities linked
to the following major issues:
- Education
- Community Development
- Health
- Environment
In many ways the organizational purpose of your Company is closely
linked to the above mentioned issues. The financial support to Concern
India Foundation will directly benefit the following important
constituents of the society:
- Women
- Children
- Senior citizens
Education Trust
Your Company also provides learning assistance to its employees who
aspire to undertake higher education through its trust "Late Shri
Rajesh Kumar Wadhawan DHFL Employees Welfare Trust". Besides
education, the said Trust also support exigency family medical support,
marriage support for deserving employees of DHFL across locations
especially the staff in lower grades who runs out of cash in case of
any exigencies and with such other objects of charitable nature.
DIRECTORS
Shri Rakesh Kumar Wadhawan Chairman, Shri Sarang Wadhawan and Shri
Ashok Kumar Gupta Directors of the Company have resigned from the Board
with effect from 28th July, 2009. Your Directors place on record their
deep appreciation for the valuable contribution made by Shri Rakesh
Kumar Wadhawan, Shri Sarang Wadhawan and Shri Ashok Kumar Gupta during
their tenure as Directors of the Company. Shri Rakesh Kumar Wadhawan
has been associated with the Company since incorporation of the Company
i.e. 1984 and has played a key role in building DHFL to its present
pre-eminent position in the corporate world.
Dr. P S. Pasricha was appointed as Additional Non- Executive
Independent Director w.e.f on 3rd March, 2010. He shall hold office
upto the date of the ensuing Annual General Meeting of the Company and,
being eligible, offer himself for appointment.
In terms of Article 1 58 of the Articles of Association of the Company,
Shri R. R Khosla and Shri R. S. Hugar, retire by rotation and being
eligible, offer themselves for re- appointment at the ensuing Annual
General Meeting.
Consequent upon the resignation of Shri Rakesh Kumar Wadhawan as the
Chairman, Shri. Kapil Wadhawan has been elevated to the post of
Chairman & Managing Director w.e.f. from 28th July, 2009, by the Board,
as recommended by Remuneration & Compensation Committee of the Board.
Term of appointment of Shri Kapil Wadhawan Chairman & Managing Director
will expire on 4th October, 2010. As recommended by the Remuneration &
Compensation Committee the Board of Directors in their meeting held on
12th May, 2010, he will be re-appointed for another term of five years
subject to the approval of the shareholders in the forthcoming Annual
General Meeting scheduled on 27th July 2010.
Brief resume of the Directors proposed to be appointed / re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership / chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges in India, are provided in the Report on
Corporate Governance forming part of the Annual Report. None of the
Directors of the Company are disqualified for being appointed/
reappointed as Directors pursuant to Section 274(1) (g) of the
Companies Act, 1956.
Inter-se Transfer of Shares
As a part of business realignment and to have focused attention in the
respective business, the Promoters of the Company have inter-se
transferred shares between the promoters. Critically, it will empower
the promoters to take independent decisions on fund-raising, joint
ventures and diversification. It will also allow them to better focus
on their respective businesses, bring clarity to shareholders and
create fewer succession issues.
Shri Rakesh Kumar Wadhawan and Shri Sarang Wadhawan have transferred
their entire shareholding of equity shares to the existing Promoter/
Promoter Group of the Company. This transfer has not resulted in any
change in the aggregate promoter holding in the Company.
AUDITORS
M/s. B.M. Chaturvedi & Co., Chartered Accountants, Mumbai, bearing
Registration Number 114317W, with the Institute of the Chartered
Accountants of India, retire at the ensuing Annual General Meeting and
being eligible, offer themselves for re-appointment. M/s. B. M.
Chaturvedi & Co., have sought reappointment and confirmed that their
reappointment shall be within the limits of Section 224 (IB) of the
Companies Act, 1956. The necessary eligibility certificate under
Section 224(1 B) of the Companies Act, 1956, was received from them.
The Audit Committee and Board of Directors recommend the appointment of
M/s. B. M. Chaturvedi & Co., Chartered Accountants, as the auditors of
your Company.
AUDITORS REPORT
The Notes to Accounts referred to in Auditors Report are
self-explanatory and do not call for any further comments.
Your Company has internal audit system which is being conducted
in-house. Efforts are being continued to further strengthen the
internal audit system.
Systems and procedures are being upgraded to provide checks and alerts
for avoiding fraud arising out of misrepresentation given by borrower/s
while availing the housing loans.
SECRETARIALAUDIT
As directed by the Securities and Exchange Board of India (SEBI),
Secretarial Audit is being carried out at the specified period, by the
Practicing Company Secretary. The findings of the secretarial audit
were entirely satisfactory.
PARTICULARS OF EMPLOYEES
The Board of Directors expresses their appreciation to all the
employees for their outstanding contribution to the operations of the
Company during the year. Information under Section 21 7(2A) of the
Companies Act, 1956, read with the Companies (Particulars of Employee
Rules, 1 975, is appended herewith.
EMPLOYEES STOCK OPTION SCHEME (ESOS)
Besides the existing Employees Stock Option Scheme 2008 (ESOS-2008),
providing for 14,22,590 stock options, your Company also announced an
Employees Stock Option Scheme 2009 (ESOS-2009), under the SEBI
(Employee Stock Option Scheme and Employee Stock Purchase Scheme)
guidelines, 1999. As approved by the Remuneration & Compensation
Committee on 25th November, 2009, the ESOS-2009 provides for 25,50,000
stock options.
During the year, your Company granted 1 2,75,000 stock options to the
employees under its ESOS-2009.
The particulars of options issued under the said Plan as required by
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1 999 are appended as Annexure and forms part of this
report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND
OUTGO
The particulars regarding foreign exchange earnings and expenditure
appear as Item No. B-35 in the Other Notes to Accounts. (Schedule Q)
Since your Company is not engaged in any manufacturing facility, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1 988 are not applicable.
SUBSIDIARY COMPANIES
During the year under review, your Company subscribed/purchased equity
shares in the subsidiary companies. The details are as given below:
- 23,28,000 equity shares of Rs. 10/- each at par in DHFL Vysya Housing
Finance Ltd.
- 1 0,00,000 equity shares of Rs. 1 0/- each at par in DHFL Property
Services Ltd.
DHFL Vysya Housing Finance Ltd. (DVHFL) is a housing finance company
registered with NHB and has operations primarily in the States of
Andhra Pradesh, Karnataka, Maharashtra and Tamil Nadu.
For the year ended March, 31, 2010, DVHFL has reported a profit after
tax of Rs 8.56 crore as compared to Rs 6.32 crore in the previous year.
The Board of Directors of the subsidiary company has declared an
interim dividend of 15% and has recommended a final dividend of 1 0%
making the total dividend to 25%.
DHFL Property Services Limited
During the year under review the Board at its meeting held on 1 1th
May, 2009, has approved the investment in DHFL Property Services
Limited (DPSL), a promoter group entity, upto an amount not exceeding
Rs. 1 crore and making it a 100% Subsidiary of your Company. The main
objects of the company is to provide quality real estate/ property
services under one roof for customers, as value added services. It is
expected that as a separate organization it will bring a sharper focus
and improvement in the quality of these services, thus permitting your
Company to focus on its core business.
The major operations of the said company began during the financial
year 2009-10 and hence no comparative data is available. For the year
ended 31 st March, 201 0, DPSL has reported a profit after tax of Rs.
17.95 lacs.
The audited accounts of DHFL Vysya Housing Finance Ltd. and DHFL
Property Services Limited together with the Reports of the Director and
the Auditor thereon, are attached to this Annual Report, as required
under Section 212 of the Companies Act, 1956.
CONSOLIDATION OF ACCOUNTS
The audited Consolidated Accounts and Cash Flow Statement, comprising
of DHFL and its subsidiary Companies, DHFL Vysya Housing Finance Ltd.
and DHFL Property Services Limited are annexed to this Annual Report.
The Auditors Report on the Consolidated Accounts is also attached.
The Consolidated Accounts have been prepared in accordance with the
Accounting Standards prescribed by the Institute of Chartered
Accountants of India in this regard.
NHB GUIDELINES
Your Company has been rigorously following the various Guidelines
issued by National Housing Bank (NHB) from time to time. The Circulars
and the Notifications issued by NHB are also placed before the Board at
regular intervals along with the compliance of the same.
During the year under review, NHB has conducted an inspection of the
Company under Section 34 of the NHB Act, 1 987 and Company has
furnished the replies to the same.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited accounts
containing the Financial Statements for the year ended 31st March, 201
0, are in conformity with the requirements of the Companies Act, 1 956
and they believe that the financial statements reflect fairly the form
and substance of transactions carried out during the year and
reasonably present the Companys financial condition and results of
operations. These Financial Statements are audited by the Statutory
Auditor, M/s. B. M. Chaturvedi & Co., Chartered Accountants, Mumbai.
In accordance with the provisions of Section 21 7 (2AA) of the
Companies Act, 1 956 and based on the information provided by the
management, your directors state that:
(i) in the preparation of accounts, the applicable accounting standards
have been followed;
(ii) accounting policies selected were applied consistently. Reasonable
and prudent judgements and estimates were made so as to give a true and
fare view of the state of affairs of the Company as at the end of 31 st
March, 201 0 and of the profit of the Company for the year ended on
that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
(iv) the annual accounts of the Company have been prepared on a going
concern basis.
CORPORATE GOVERNANCE
Your Company has complied with all the provisions of Corporate
Governance as prescribed under the amended Listing Agreements of the
Stock Exchanges, with which the Companys shares are listed. Pursuant
to Clause 49 of the Listing Agreements with the Stock Exchanges, the
followings form part of this Annual Report:
(i) Managing Directors declaration regarding compliance of Code of
Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion and Analysis
(iii) Report on the Corporate Governance;
(iv) Auditors Certificate regarding compliance of conditions of
Corporate Governance.
Future Outlook
Housing / real estate sector which is slowly coming out of the Mid 2008
slump, has received good support from Union Budget 2010-11. While the
budget has encouraged affordable housing below Rs 20 lakhs with 1 %
interest subvention for housing loan upto 10 lakhs and extension of
benefits available under section 80IB by one more year, inclusion of
some services are extended so as to bring under service tax impacting
the industry in difficult times.
With the recent recovery in the demand for housing and real estate
sectors, activities in the housing, real estate sectors and
infrastructure sectors are expected to remain healthy in the coming
quarters. This will lead to a rise in credit demand for housing.
The liquidity conditions of your Company has remained comfortable
during the year. Your Company has successfully raised funds from banks
as well as non bank sources. Your Company do not expect any pressure on
the liquidity front in the months to come either. This is because
liquidity conditions in the banking system will continue to remain
comfortable. A healthy demand of credit for home loan coupled with
comfortable liquidity conditions will lead to a rise in disbursement
ACKNOWLEDGMENTS
Your Directors wish to place on record their gratitude to the NHB, the
Companys Customers, Bankers, Shareholders, Debenture holders,
Depositors and others for their assistance and co-operation and who
have helped the Company in its endeavour. The Board also places on
record its deep appreciation for the excellent support received from
the employees at all levels during the year. The Directors also like
to thank The Bombay Stock Exchange Ltd., The National Stock Exchange of
India Ltd., NSDL, CDSL and the Credit Rating Agencies for their
co-operation.
for and on behalf of the Board
Kapil Wadhawan
Chairman & Managing Director
Dated: 12th May, 2010
Place : Mumbai
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