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Notes to Accounts of Dewan Housing Finance Corporation Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION

Dewan Housing Finance Corporation Limited (''DHFL''), ''the Company'' was incorporated in India on April 11, 1984 and has been carrying on, as its main business of providing loans to Retail customers for construction or purchase of residential property and loans against property. The Company is registered with National Housing Bank (NHB) under Section 29A of the National Housing Bank Act, 1987. DHFL has its registered office in Mumbai and has 188 branches, 150 service centres, 19 Circle / Cluster, 2 Disbursement Hub and 1 Collection centers in India and 2 representative offices in UAE and UK.

2 CONTINGENT LIABILITY : (Rs. in lakh) As at As at March 31,2015 March 31,2014

Guarantees provided by the Company 10,003 10,003

Claims against the Company not acknowledged as debts 546 105

Income Tax Demand (Net of amount deposited under protest Rs. 50 lakh) 480 430

3 Contingent Liability in respect of undertaking provided by the Company for meeting the shortfall in collection, if any, at the time of securitisation of receivables outstanding as at 31st March, 2015 amounting to Rs. 34,271 lakh (Rs. 29,259 lakh). The outflows would arise in the event of short collection, in the Cash inflows of the pool of securtised receivable.

4 Capital Work in Progress includes Rs. 79,615 lakh (Rs. 79,615 lakh) paid as part consideration for acquiring office premises under construction.

5 The Company has paid dividend Rs. 9 lakh (Rs. 3 lakh) and Rs. 2 lakh (Rs. 1 lakh) as tax on distribution of dividend thereon to new shareholders on account of Final Dividend for the year 2013-14 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.

6 NHB, vide its letter dated October 15, 2014, in terms of provisions of paragraph 29(5) of the Housing Finance Companies (NHB) direction 2010 had levied a penalty of Rs. 20,000/- (Rupees twenty thousand), on the Company, which has been paid by the Company. The penalty was levied for non-compliance of the provisions of paragraph 21 of Housing Finance Companies (NHB) Directions, 2010, in relation to delay in intimation to NHB for closure of branches at 2 locations. NHB, vide its letter dated 9th January, 2015, had also levied a penalty of Rs. 25,000/- (Rupees twenty five thousand) on the Company during F Y 2014-15 and has been paid by the company, on account of delayed submission of Dynamic Report relating to Assets Liability Management (ALM) System for HFCs in the earlier year.

7 The managerial remuneration including perquisites, Rs. 171 lakh (Rs. 171 lakh) paid to Chairman and Managing Director and Rs. 30 lakh (Rs. 30 lakh) as commission to other Non Executive Directors.

8 REMITTANCE IN FOREIGN CURRENCIES ON ACCOUNT OF DIVIDEND

The particulars of dividends payable to non-resident shareholders (including Foreign Institutional Investors) is as under, however, the Company does not have information as to the extent to which remittances, if any, has been made in foreign currencies on account of such dividend during the year on behalf of non-resident share holders.

9 RELATED PARTY TRANSACTIONS

As per Accounting Standard (AS 18) on "Related Party Disclosures" details of transactions with related parties as defined therein are given below:

A) List of related parties with whom transactions have taken place during the year and relationship:

1) companies

Joint Ventures

DHFL Pramerica Life Insurance Company Limited Associate / Related entities.

Avanse Financial Services Limited, Aadhar Housing Finance Limited, DHFL Vysya Housing Finance Limited,DHFL Venture Trustee Company Private Limited, Shri Rajesh Kumar Wadhawan Education Trust, Wadhawan Global Capital Private Limited, Arthveda Fund Management Private Limited, DHFL Property Services Limited (upto 16.03.2015), Wadhawan Retail Private Limited (Upto 14.11.2014),DHFL Sales and Services Limited (upto 16.03.2015), Wadhawan Holdings Private Limited(upto 16.03.2015),Dish Hospitality Private Limited (upto 14.11.2014), Wadhawan Consolidated Holdings Private Limited (upto 14.11.2014)

2) KEY MANAGEMENT pERSONNEL

a. Mr. Kapil Wadhawan Chairman & Managing Director

b. Mr. Harshil Mehta Chief Executive Officer (w.e.f. January 17, 2015)

c. Mr. Santosh Sharma Chief Financial Officer

d. Ms. Niti Arya Company Secretary

e. Mr. Deo Shanker Tripathy President and Chief Operating officer (upto January 16, 2015)

f. Mr. Rakesh Makkar President (upto August 11,2014)

Notes

1) * Advances includes amounts debited towards reimbursement of expenses and income receivable.

2) The figures of income and expenses are net of service tax.

3) ** Advances given during the year includes outstanding opening loan balance of Rs. 45 lakh given to KMP as per Companies Act, 2013.

4) # The Company, in its capacity as Life Insurance Corporate Agent, has entered into an agreement with DHFL Pramerica Life Insurance Company Limited (Insurance Company) to distribute their life insurance products.

As required under Accounting Standard 15 [AS-15 Revised, 2005] the Company has made full provision for future gratuity liability & leave encashment liability payable at the time of retirement as on March 31,2015. On the basis of Gratuity and GLES report under Accounting Standard 15 [AS-15 Revised, 2005] provided by Certified Actuary, the Company has made necessary full contribution to LIC of India of its own liabilities.

The details of post retirement benefits for the employees (including Key Management Personnel) as mentioned hereunder are based on the above report as provided by Certified Actuary and LIC of India as mentioned above and relied upon by the auditors :

10 Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Figures in brackets represent previous year''s figures.


Mar 31, 2014

1 CORPORATE INFORMATION

Dewan Housing Finance Corporation Limited (''DHFL''), ''the Company'' was incorporated in India on April 11, 1984 and has been carrying on, as its main business of providing loans to Retail customers for construction or purchase of residential property and loans against property. The Company is registered with National Housing Bank (NHB) under Section 29A of the National Housing Bank Act, 1987. DHFL has its registered office in Mumbai and has 162 branches, 92 service centers, 19 camp locations, 20 Zonal / Regional office, 2 Disbursement Hub and 2 Collection centres in India and 2 representative offices in UAE and UK.

2.1 The Company has, at present, one class of issued, subscribed and paid up share referred to as equity shares having a par value of H10/- each. Each holder of equity share is entitled to one vote per share.The Company declares and pays dividends in Indian Rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2.2 Details of aggregate number of shares issued for consideration other than cash during the period of five years:

Company has alloted 1,08,86,375 No of Equity Shares as fully paid up for consideration other than cash as per the Scheme of Amalgamation during the financial year 2012 - 13.

2.3 Employee Stock Option Plans:

a. Employee Stock Option Scheme 2008 (ESOS-2008) was implemented by the Company. 14,22,590 equity share options were granted under ''ESOS-2008'' in 2008-09 to the employees as approved by the remuneration and compensation committee of directors of the Company at H53.65 per share, the reconsidered price approved in the EOGM dated March 31, 2009.

During the year, the Company has allotted, from time to time, 81,458 (256,094) number of equity shares of H10/- each to various eligible employees under ''ESOS 2008'' at the price of H53.65 per equity share (including a premium of H43.65 per equity share) aggregating to H8 lakh (H137 lakh) as approved in the AGM dated July 23, 2007 and allotted at the reconsidered price approved in the EOGM dated March 31, 2009.

b. Employee Stock Option Scheme 2009 (ESOS-2009) was implemented by the Company. 12,75,000 equity share options were granted under ''ESOS-2009, Plan I'' in 2009-10 and additional 12,34,670 equity share options were approved to be granted under ''ESOS-2009, Plan II'' in 2010-11 to the employees by the remuneration and compensation committee of directors of the Company at H141/- per share, the price approved in the remuneration and compensation committee meeting held on November 25, 2009.

During the year, the Company has allotted, from time to time, 120,073 (236,259) number of equity shares of H10/- each to various eligible employees under ''ESOS 2009'' at the price of C141/- per equity share (including a premium of H131/- per equity share) aggregating to H12 lakh (H333 lakh) as approved in the AGM dated July 23, 2007.

3.1 During the year, the Company has paid an interim dividend on equity shares @ H3/-(H2/-) per share. The Board of Directors, has further recommended dividend to be paid out of current year profits @ H2/- (H3/-) per equity share to the equity shareholders as final dividend along with additional special 30th Anniversary celebration dividend @ H3/- per equity share, aggregating to H8/- per equity share for the year 2013-14.

3.2 In accordance with Section 78 of the Companies Act, 1956, during the year, the Company has utilised Securities Premium Account towards amortisation of securities issue expenses and premium on redemption of Zero Coupon Secured Redeemable Non-Convertible Debentures amounting to H3,471 lakh (H807 lakh), net of tax of H773 lakh (H283 lakh).

4.1 Non Convertible Debentures (NCD) (current and non current portion) amounting to H490,889 lakh (H346,399 lakh) are secured by way of first charge read with Note 5.2 herein below and are redeemable at par, in one or more instalments, on various dates, as below.

4.2 All Secured loans (Current and Non Current portion), from the National Housing Bank, other Banks, Asian Development Bank, Financial Institutions and Secured Non Convertible Debentures / ZCD are secured by way of first charge to and in favour of participating banks, Institutions, National Housing Bank and Debenture Trustees jointly ranking pari passu (read with Note 9.1), inter-se, on the Company''s whole of the present and future book debts outstanding, investments including all the receivables of the Company and other movable assets, wherever situated, excluding SLR assets, read with Note 5.3 & 5.4 hereinafter. They are further secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties of the Company, to Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture trustees, and are also guaranteed by the promoter directors of the Company.

4.3 During the year, Company has availed ECB of USD 70 millions from IFC Washington for a period of 8 years. The principal amount has been hedged to protect the foreign currency risk and converted into Rupee liability of H41,825 lakh and reflected as Loan from Financial Institutions.

4.4 The National Housing Bank directives require all HFCs accepting public deposits to create a floating charge on the statutory liquid assets maintained in favour of depositors through the mechanism of a trust deed. The Company has accordingly appointed a SEBI approved trustee Company as trustee for the above by executing the trust deed.

4.5 Unsecured Redeemable Non Convertible Subordinated Debentures aggregating to H119,150 lakh (H114,150 lakh), outstanding as at March 31, 2014, are subordinated to present and future senior indebtedness of the Company. It qualifies as Tier II capital in accordance with National Housing Bank (NHB) guidelines for assessing capital adequacy based on balance term to maturity. These debentures are redeemable at par on maturity on various dates read with note no 5.1.

4.6 Fixed Deposits and Other Deposits, including short term fixed deposits and short term other deposits, are repayable as per individual contracted maturities ranging from 12 to 84 months from the date of deposit. The interest is payable on contracted terms depending upon the scheme opted by the depositor.

4.7 Department of Company Affairs with reference to the General Circular no. 4/2003 dated 16.01.2003, has clarified that, Housing Finance Companies registered with National Housing Bank are 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, as such no DRR has been created.

5.1 The Company has written off H355 lakh (H494 lakh) as bad debts and by way of one time settlement to recover some of its NPA and Loss Accounts. The Company has withdrawn H355 lakh (H494 lakh) from contingency provisions created out of profits of earlier years.

5.2 Provision for Contingencies

The Company has made full provisions for Contingencies for diminution in investment value and on standard as well as on non-performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company has maintained additional provision amounting to H901 lakh (H1,375 lakh).

6.1 Loans repayable on demand and other short term loans comprises of Cash credit facilities from banks and are secured by a first charge by way of hypothecation of book debts of specific loan assets of the Company and are further secured by negative lien on the underlying specific properties and / or secured by demand promissory notes. Certain Cash credit facilities are also secured by way of a first pari passu charge along with other secured loans read with Note 5.2. All cash credit facilities are repayable as per the contracted / roll over term.

7.1 As required under Section 205 (C) of the Companies Act, 1956, the Company has transferred unclaimed dividend of the year 2005-06 H8 lakh (H6 lakh), unclaimed Interim dividend of the year 2006-07 H8 lakh (H6 lakh) and H19 lakh (H5 lakh) towards unclaimed Deposits and interest accrued thereon to Investor Education & Protection Fund (IEPF) during the year. There were no amounts due for transfer to IEPF on the date of Balance Sheet.

8.1 Investment in Government and other SLR Securities aggregating to H15,087 lakh (H10,281 lakh) carry a floating charge created in favour of depositors in the Fixed Deposit schemes of the Company (read with Note 5.2 and Note 5.4 above).

8.2 The Company has acquired 16,29,01,250 number of shares being 50% stake in DLF Pramerica Life Insurance Co Ltd, a registered life insurance company in India regulated by IRDA during the year from DLF Limited at deminimus value of H1. The Company had capitalised H694 lakh being expenses incurred in relation to the above acquisition as a cost of investment. Subsequently Company has subscribed for 72,86,589 number of shares @ H10 each for H729 lakh to maintain its holding at 50% and to augument the resources of the Company. Consequent to this acquisition name of the company has been changed to DHFL Pramerica Life Insurance Co Limited with the approval of IRDA and ROC.

9.1 Property loans consists of non-housing loans such as mortgage loans, project loans, commercial loans, plot loans, lease rental finance and other loans which are all against real estate properties and which are not covered under the housing loan criteria of National Housing Bank.

9.2 As certified by the management, loans given by the Company are secured by equitable mortgage / registered mortgage of the property and assets financed and / or assignment of Life Insurance policies and / or personal guarantees and / or undertaking to create a security and / or hypothecation of assets and are considered appropriate and good.

9.3 Composite Loans sanctioned (i.e. loans allowed for purchase of plot and self construction of house) on or before March 31, 2011, in which construction has not started till March 31, 2014, as per information available with the Company, is excluded from Housing Loans and regrouped under Other Property Loans (Non Housing) in above outstanding as on March 31, 2014 aggregating to H2,206 lakh (H811 lakh).

9.4 The Company has entered into Loan Syndication arrangements with certain public and private sector banks to provide Housing loan to borrowers wherein DHFL originates the loan files and gets it processed under common credit norms. The said banks have agreed to participate upto 50% of the disbursed loan portfolio under loan syndication arrangement. Entire / partial processing fees and other charges / income on these loans, depending upon the syndication arrangements, accrues to DHFL. The Company has derecognised the said loan portion syndicated to others in its books.

9.5 The Company has also entered into Loan Syndication arrangements with DHFL Vysya Housing Finance Limited and Aadhar Housing Finance Limited to provide Housing and Property Loans to borrowers wherein DHFL originates the loan files through its branches and gets it processed under common credit norms at the Central Processing Unit. The loan syndicate participants have agreed to participate in the disbursed loan portfolio under loan syndication arrangement. The Company has derecognised above loan portion syndicated to others in its books.

9.6 The Company has acquired certain assets under SARFAESI which are retained for the purpose of sale under the rules and regulations of SARFAESI involving H4,419 lakh (H 1,663 lakh) out of 148 (124) cases which are part of NPA portfolio for which necessary provisions have already been made.

9.7 The Company has securitised / assigned pool of certain housing and property loans and managed servicing of such loan accounts. The balance outstanding in the pool, as at the reporting date aggregates to H422,544 lakh (H221,473 lakh). These assets have been de-recognised in the books of the Company. The Company is responsible for collection and getting servicing of this loan portfolio on behalf of buyers / investors. In terms of the said securitisation / assignment agreements, the Company pays to buyer / investor on monthly basis the prorata collection amount as per individual agreement terms.

9.8 Housing and other property loans (current and non-current) includes H139 lakh (H47 lakh) given to the key managerial persons of the Company under the normal course of business.

10.1 Non Current portion of balances with Banks in Deposit Accounts includes deposits under lien aggregating to H7,088 lakh (H14,725 lakh) being securitisation comforts provided to various Trustees / buyer, H11,153 lakh (H10,634 lakh) being earmarked for SLR requirements of NHB, HNil (H500 lakh) being margin money for bank guarantees, and HNil (H1,300 lakh) under lien against Interest rate swaps.

11 LEASES

Operating Lease

The Company has taken certain premises for office and residential use for its employees under cancellable and non cancellable operating lease agreements. Terms of the lease include terms for renewal, increase in rents in future periods and terms of cancellation. The total lease rent recognised as an expense during the year under the lease agreements amounts to H2,051 lakh (Previous Year H2,032 lakh).

12

Two subsidiaries of the Company were amalgamated into the Company during the year 2012-13 pursuant to the Scheme of amalgamation (Scheme) under Section 391 to 394 of the Companies Act, 1956 approved by the Board of directors of all the three companies and sanctioned by the Hon''ble High Court of judicature at Bombay vide its order dated July 27, 2012 and by the Hon''ble High Court of judicature at Delhi vide its order dated January 4, 2013 which were filed with the Registrar of Companies on January 31, 2013 being the effective date for the amalgamation scheme. In terms of the above scheme the Assets and Liabilities of the subsidiary companies were amalgamated with DHFL at their respective fair value in the previous year. Proportionate Fair value appreciation surplus amounting to H4,162 lakh (H5,206 lakh) has been amortised out of the capital reserve in terms of the valuation report of the scheme, based on the documented repayment schedule.

13

In the opinion of the Board, the assets of the Company have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated, net of contingency provisions.

14

The Company''s Income Tax Assessment has been completed upto assessment year 2011-12. In respect of amalgamating company, additional demands have been raised by the department which are pending in appeal at various forums. Company has partially deposited the additional tax so demanded under protest. No provision has been made in the books against such demands as the Company believes that the cases will be decided in its favour based on legal advice and similar precedent case laws available.(Refer Note 33)

15 INTEREST RATE SWAPS

In compliance with Asset Liability Management Policy, the Company had in past entered into interest rate swaps of notional value aggregating to H9,500 Lakh to hedge its interest rate risk which were designated as fair value hedges, in accordance with the generally accepted accounting principles.

The changes in the fair value of these derivatives are recorded in the income statement, together with any changes in the fair value of the underlying asset or liability that are attributable to the hedged risk. The Mark to Market (MTM) losses on these swaps recognised in past, is amortised over the period of the hedges. Accordingly, net gain in current year on hedging of interest rate swaps and write back of MTM losses amounting to H27 lakh (H Nil) has been adjusted in "Interest and Finance Cost".

16

The Company operates under a single (primary) business segment viz. "Providing loans for construction or purchase of residential property and loans against property". Further, the Company is operating in a single geographical segment. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard on Segment Reporting (AS-17) notified u/s 211(3C) of the Companies Act, 1956 are not applicable to the Company.

17 CONTINGENT LIABILITY (Rs. in Lakh)

As at As at Particulars March 31, 2014 March 31, 2013

Guarantees provided by the Company 10,003 9,996

Claims against the Company not acknowledged as debts 105 83

Income Tax Demand (Net of amount deposited under protest Rs.67 lakh) 430 430

18

Contingent liability in respect of undertaking provided by the Company for meeting the shortfall in collection, if any, at the time of securitisation of receivables outstanding as at March 31, 2014 amounting to H29,259 lakh (H18,929 lakh). The outflows would arise in the event of short collection, in the cash inflows of the pool of securtised receivable.

19

Capital Work in Progress includes H79,615 lakh (H25,871 lakh) paid as part consideration for acquiring office premises under construction.

20

The Company has paid dividend H3 lakh (H8 lakh) and H1 lakh (H1 lakh) as tax on distribution of dividend thereon to new shareholders on account of Final Dividend for the year 2012-13 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.

21

The managerial remuneration including perquisites, H171 lakh (H175 lakh) paid to Chairman and Manging Director and H30 lakh (H30 lakh) as commission to other Non Executive Directors.

22

NHB, vide its letter dated March 31, 2014 in terms of provisions of paragraph 29(5) of the Housing Finance Companies (NHB) direction 2010 had levied a penalty of H5,000/- (Rupees five thousand), which has been paid by the Company, under protest, in relation to Section 29C of the National Housing Bank Act, 1987 on the Company for the year 2012-13.

23 REMITTANCE IN FOREIGN CURRENCIES ON ACCOUNT OF DIVIDEND

The particulars of dividends payable to non-resident shareholders (including Foreign Institutional Investors) is as under, however, the Company does not have information as to the extent to which remittances, if any, has been made in foreign currencies on account of such dividend during the year on behalf of non-resident share holders.

24 RELATED PARTY TRANSACTIONS

As per Accounting Standard (AS 18) on " Related Party Disclosures" details of transactions with related parties as defined therein are given below:

A) List of related parties with whom transactions have taken place during the year and relationship:

1) COMPANIES

(i) Associate Companies

a. DHFL Vysya Housing Finance Ltd.

b. DHFL Property Services Ltd.

c. Aadhar Housing Finance Ltd. (Formerly known as "Aadhar Housing Finance Pvt. Ltd.")

d. First Blue Business Advisors Ltd. (Formerly known as "DHFL Insurance Services Ltd.")

e. Arthveda Fund Management Pvt. Ltd.

f. Dish Hospitality Pvt. Ltd.

g. Wadhawan Holdings Pvt. Ltd.

h. Wadhawan Retail Pvt. Ltd.

i. Avanse Financial Services Ltd.

j. DHFL Sales and Services Ltd.

k. DHFL Venture Trustee Co. Pvt. Ltd.

(ii) Joint Venture Company

a. DHFL Pramerica Life Insurance Company Ltd.

(iii) Others

a. Shri Rajesh Kumar Wadhawan Education Trust

2) KEY MANAGEMENT PERSONNEL

a. Mr. Kapil Wadhawan Chairman & Managing Director

b. Mr. Anil Sachidanand President (till September 16, 2013)

c. Mr. Anoop Pabby President (till February 9, 2014)

d. Mr. Rakesh Makkar President

e. Mr. Deo Shankar Tripathi President (w.e.f May 6, 2013)

25

Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Figures in brackets represent previous year''s figures


Mar 31, 2013

1 CORPORATE INFORMATION

Dewan Housing Finance Corporation Limited (''DHFL''), ''the Company'' was incorporated in India on 11th April, 1984 and is carrying on the business of providing loans to retail customers for construction or purchase of residential property and loans against property. The company is registered with National Housing Bank under section 29A of the National Housing Bank Act, 1987. DHFL has its registered office in Mumbai and has 166 branches, 75 service centres, 31 camp locations, 18 zonal/ regional office, 2 disbursement hub and 4 collection centers in India and 2 representative offices in UAE and UK.

2.1 Authorised capital of the company is increased on account of amalgamation as approved by the Hon''ble High Court''s of Judicature at Bombay and Delhi, read with Note 27.

The Company has, at present, one class of issued, subscribed and paid up share referred to as equity shares having a par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

2.2 Details of aggregate number of shares issued for consideration other than cash during the period of five years:

Company has allotted 1,08,86,375 No of Equity Shares as fully paid up for consideration other than cash as per the Scheme of Amalgamation during the year (Refer Note 27).

2.3 Employee Stock Option Plans:

a. Employee Stock Option Scheme 2008 (ESOS-2008) was implemented by the Company. 14,22,590 equity share options were granted under ''ESOS-2008'' in 2008-09 to the employees as approved by the remuneration and compensation committee of directors of the Company at Rs. 53.65 per share, the reconsidered price approved in the EOGM dated 31st March, 2009.

During the year, the Company has allotted, from time to time, 256,094 (301,264) number of equity shares of Rs. 10/- each to various eligible employees under ''ESOS 2008'' at the price of Rs. 53.65 per equity share (including a premium of Rs. 43.65 per equity share) aggregating to Rs. 137 lacs (Rs. 162 lacs) as approved in the AGM dated 23rd July, 2007 and allotted at the reconsidered price approved in the EOGM dated 31st March, 2009.

b. Employee Stock Option Scheme 2009 (ESOS-2009) was implemented by the Company. 12,75,000 equity share options were granted under ''ESOS-2009, Plan I'' in 2009-10 and additional 12,34,670 equity share options were approved to be granted under ''ESOS-2009, Plan II'' in 2010-11 to the employees by the remuneration and compensation committee of directors of the Company at Rs. 141/- per share, the price approved in the remuneration and compensation committee meeting held on 25th November, 2009.

During the year, the Company has allotted, from time to time, 236,259 (202,442) number of equity shares of Rs. 10/- each to various eligible employees under ''ESOS 2009'' at the price of Rs.141/- per equity share (including a premium of Rs. 131/- per equity share) aggregating to Rs. 333 lacs (Rs. 285 lacs) as approved in the AGM dated 23rd July, 2007.

2.4 During the year, the Company has paid an interim dividend on equity shares @ Rs. 2/-(Nil) per share. The Board of Directors, has further recommended final dividend to be paid out of current year profits @ Rs. 3/- (Rs. 3.50) per equity share to the equity shareholders.

3.1 Non Convertible Debentures (NCD) (current and non current portion) amounting to Rs. 346,399 lacs (Rs. 185,020 lacs) are secured by way of first charge read with Note 5.2 herein below and are redeemable at par, in one or more instalments, on various dates, between June, 2013 and December, 2022.

Secured NCDs also include amount outstanding for Zero Coupon Secured Redeemable Non-Convertible Debentures (ZCD) aggregating to Rs. 7,996 lacs (Rs. Nil), including Rs. 5,869 lacs (Rs. Nil) of the amalgamating company read with note 5.3, which are redeemable at premium on maturity. The accumulated premium payable on outstanding ZCD accrued till 31st March, 2013 amounting to Rs. 756 lacs is included above and has been provided out of the securities premium account (refer Note 4.1).

3.2 All Secured loans (Current and Non Current portion), from the National Housing Bank, other Banks, Asian Development Bank, Financial Institutions and Secured Non Convertible Debentures / ZCD are secured by way of first charge to and in favour of participating banks, Institutions, National Housing Bank and Debenture Trustees jointly ranking pari passu (read with Note 9.1), inter-se, on the Company''s whole of the present and future book debts outstanding, investments including all the receivables of the Company and other movable assets, wherever situated, excluding SLR assets, read with Note 5.3 & 5.4 hereinafter. They are further secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties of the Company, to Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture trustees, and are also guaranteed by the promoter directors of the Company.

3.3 The secured loans (current and non current portion) read with Note 9.1 availed by amalgamating company from various lenders/ institutions are secured for the time being as under. However, the Company is in discussions with its various lenders for re-alignment of security clauses in terms of its existing debts.

a. Secured NCDs and ZCDs aggregating to Rs. 66,919 lacs are secured by a first charge by way of hypothecation of book debts of specific loan assets and by way of mortgage of certain land of the Company.

b. The term loans from National Housing Bank amounting to Rs. 44,721 lacs are secured by mortgage of certain immovable properties and a first exclusive charge by way of hypothecation of all movable properties, excluding specific housing and property loans & investments, of amalgamating Company. These loans are further secured by a first exclusive mortgage/ charge by way of hypothecation of specific book debts in respect of housing loans against which refinance has been availed.

c. The term loans from Banks aggregating to Rs. 403,136 lacs are secured by a first charge by way of hypothecation of book debts of specific loan assets of the amalgamating Company and some of them are further secured by negative lien on the underlying specific properties and / or secured by demand promissory notes.

3.4 The National Housing Bank directives require all HFC''s accepting public deposits to create a floating charge on the statutory liquid assets maintained in favour of depositors through the mechanism of a trust deed. The Company has accordingly appointed a SEBI approved trustee Company as trustee for the above by executing the trust deed.

3.5 Unsecured Redeemable Non Convertible Subordinated Debentures aggregating to Rs. 114,150 lacs (Rs. 65,500 lacs), outstanding as at 31st March, 2013, are subordinated to present and future senior indebtedness of the company. It qualifies as Tier II capital in accordance with National Housing Bank (NHB) guidelines for assessing capital adequacy based on balance term to maturity. These debentures are redeemable at par on maturity between August 2013 and October 2023.

3.6 Fixed Deposits and Other Deposits, including short term fixed deposits and short term other deposits, are repayable as per individual contracted maturities ranging from 12 to 84 months from the date of deposit. The interest is payable on contracted terms depending upon the scheme opted by the depositor.

3.7 Department of Company affairs vide their general circular no. 4/2003 dated 16.01.2003, which has not been modified, has clarified that Housing Finance Companies registered with National Housing Bank are exempt from the requirement of creating Debenture Redemption Reserve (DRR) in case of privately placed debentures. Since the Debenture issues of the Company till day are through private placement, no DRR has been created.

4.1 The Company has written off Rs. 494 lacs (Rs. 236 lacs) as bad debts and by way of one time settlement to recover some of its NPA and Loss Accounts. The Company has withdrawn Rs. 494 lacs (Rs. 236 lacs) from contingency provisions created out of profits of earlier years.

4.2 Provision for Contingencies

The Company has made full provisions for Contingencies for diminution in investment value and on standard as well as on non- performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company has maintained additional provision amounting to Rs. 1,375 lacs.

5.1 Loans repayable on demand and other short term loans comprising of Cash credit facilities from banks includes borrowings of amalgamating company and are secured by a first charge by way of hypothecation of book debts of specific loan assets of the company and are further secured by negative lien on the underlying specific properties and / or secured by demand promissory notes. Certain Cash credit facilities are also secured by way of a first pari passu charge along with other secured loans read with Note 5.2. All cash credit facilities are repayable as per the contracted/ roll over term.

6 TRADE PAYABLES

There is no amount due and payable to ''Suppliers'' registered under the Micro, Small and Medium Enterprises Development Act, 2006 at the end of the year. No interest has been paid/ is payable by the Company during/for the year to these ''Suppliers''. The above information takes into account only those suppliers who have submitted their registration details or has responded to the inquiries made by the Company for this purpose.

7.1 Investment in Government and other SLR Securities aggregating to Rs. 10,381 lacs (Rs. 4,887 lacs) carry a floating charge created in favour of depositors in the Fixed Deposit schemes of the Company (read with Note 5.2 and Note 5.4 above).

7.2 As required by NHB, the Company has divested its shareholding in Aadhar Housing Finance Private Limited from 50.00% to 14.90% during the year. A profit of Rs. 246 lacs was earned from the dis-investment.

8.1 Property loans consists of non-housing loans such as mortgage loans, project loans, commercial loans, plot loans, lease rental finance and other loans which are all against real estate properties and which are not covered under the housing loan criteria of National Housing Bank.

8.2 As certified by the management, loans given by the Company are secured by equitable mortgage/ registered mortgage of the property and assets financed and/or assignment of Life Insurance policies and/or personal guarantees and/or undertaking to create a security and/or hypothecation of assets and are considered appropriate and good.

8.3 Composite Loans sanctioned (i.e. loans allowed for purchase of plot and self construction of house) on or before 31st March, 2010, in which construction has not started till 31st March, 2013, as per information available with the Company, is excluded from Housing Loans and regrouped under Other Property Loans (Non Housing) in above outstanding as on 31st March, 2013 aggregating to Rs. 811 lacs (Rs. 1,256 lacs).

8.4 The Company has entered into Loan Syndication arrangements with certain public and private sector banks to provide Housing loan to borrowers wherein DHFL originates the loan files and gets it processed under common credit norms. The said banks have agreed to participate upto 50% of the disbursed loan portfolio under loan syndication arrangement. Entire/partial processing fees and other charges/ income on these loans, depending upon the syndication arrangements, accrues to DHFL. The Company has derecognised the said loan portion syndicated to others in its books.

8.5 The Company has also entered into Loan Syndication arrangements with DHFL Vysya Housing Finance Limited and Aadhar Housing Finance Limited to provide Housing and Property Loans to borrowers wherein DHFL originates the loan files through its branches and gets it processed under common credit norms at the Central Processing Unit. The loan syndicate participants have agreed to participate in the disbursed loan portfolio under loan syndication arrangement. The Company has derecognised above loan portion syndicated to others in its books.

8.6 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. 1,663 lacs (Rs. 1,403 lacs) out of 124 (163) cases which are part of NPA portfolio for which necessary provisions have already been made.

8.7 The Company has securitized / assigned pool of certain housing and property loans and managed servicing of such loan accounts. The balance outstanding in the pool, as at the reporting date aggregates to Rs. 221,473 lacs (Rs. 173,927 lacs). These assets have been de- recognised in the books of the Company. The Company is responsible for collection and getting servicing of this loan portfolio on behalf of buyers / investors. In terms of the said securitization/assignment agreements, the Company pays to buyer/investor on monthly basis the prorata collection amount as per individual agreement terms.

8.8 Housing and other property loans (current and non-current) includes Rs. 47 lacs (Rs. 42 lacs) given to the key managerial persons of the company under the normal course of business.

9.1 Loans to employees are secured by the hypothecation of respective assets against which these loans have been granted.

9.2 Other loans and advances include servicing asset for securitization of Rs. 340 lacs (Rs. Nil) secured by underlying mortgages of the specific loan assets in the securitized pool of assets and is subordinated to the rights of the senior Class PTCs. The Company shall realize these assets upon settlement of dues to the senior class PTCs as per the contracted terms and conditions for the respective securitization deals.

10 LEASES

10.1 Operating Lease

The Company has taken certain premises for office and residential use for its employees under cancellable and non cancellable operating lease agreements. Terms of the lease include terms for renewal, increase in rents in future periods and terms of cancellation. The total lease rent recognized as an expense during the year under the lease agreements amounts to Rs. 2,032 lacs (Previous Year Rs. 1,058 lacs).

11 a. DHFL Led consortium including Caledonia Investments PLC, UK and its subsidiary have acquired 100% shareholding of Deutche Post Bank Home Finance Ltd, a NHB registered Housing finance company, with effect from 25th March, 2011, with the ultimate object to amalgamate with DHFL, and whose name was subsequently changed to First Blue Home Finance Ltd. (FBHFL) for an aggregate amount of Rs. 1,079 Crores.

b. With effect from 1st April, 2011 being appointed date for amalgamation, First Blue Home Finance Ltd. and DHFL Holding Private Limited (both subsidiaries of the Company) were amalgamated into the Company pursuant to the Scheme of amalgamation (Scheme) under Section 391 to 394 of the Companies Act, 1956 approved by the Board of Directors of all the three companies and sanctioned by the Hon''ble High Court of judicature at Bombay vide its order dated 27th July, 2012 and by the Hon''ble High Court of judicature at Delhi vide its order dated 4th January,2013 which were filed with the Registrar of Companies on 31st January, 2013 being the effective date for the amalgamation scheme.

c. The Company has carried out the accounting treatment by adopting ''purchase method'' as prescribed in the Amalgamation Scheme approved by the Hon''ble High Courts. The required disclosures as per paragraph 23 & 42 of Accounting Standard 14 (AS 14) ''Accounting for Amalgamations'' as prescribed under the Companies (Accounting Standards) Rules, 2006 have also been provided. Company has also been legally advised that the accounting treatment for the amalgamation is in line with the scheme approved by the Hon''ble Courts. Accordingly the Assets and Liabilities of the subsidiary companies were amalgamated with DHFL at their respective fair value.

d. In consideration for the amalgamation, Company has allotted to all shareholders other than specified shareholders of FBHFL whose name was registered on record date for such allotment, a total of 108,86,375 equity shares of Rs. 10/- each credited as fully paid at share premium of Rs. 311.50 per share, being fair value as per paragraph 14 of AS 14, based on the cost of shares of FBHFL on acquisition and swap ratio recommended by ERNST & YOUNG, for the purpose of amalgamation of First Blue Home Finance Ltd into DHFL, of 10 Equity shares of DHFL for every 97 equity Shares of FBHFL and fairness opinion on the above swap ratio in relation to fairness of consideration (Exchange Ratio) for the proposed transfer, issued by Standard Chartered Bank.

e. FBHFL has valued its all assets and liabilities in its books of accounts at their fair value and for this purpose, to follow the paragraph 11.1 of the scheme of merger, has appointed SEBI approved category one Merchant Banker, Antique Capital Marketing Pvt. Ltd. as independent valuer for the valuation of its Housing Loan Portfolio as on appointed date for the amalgamation and also for the subsequent period up to effective date of the amalgamation to give uniform treatment on matching principle of accounting to its all assets. As company and its both subsidiaries has already adopted the financial accounts for the year ended 31st March, 2012 in their respective AGMs, effective date has been considered as the date of amalgamation for the purpose of AS 14. As per above valuation report Fair value appreciation surplus of FBHFL Housing loan book as on 1st April, 2011 was Rs. 741 crores and Rs. 1,030 crores on effective date for amalgamation. FBHFL has also appointed another SEBI approved Category-I Merchant Banker The Trust Capital for providing fairness opinion on the above valuation report on loan portfolio. The Trust Capital has issued the fairness opinion on above valuation report of FBHFL saying that the valuation so arrived is fair in their opinion.

f. In terms of Clause 11 of the High Court approved Amalgamation Scheme, read with the Accounting Standard AS-14 issued by the Institute of Chartered Accountants of India, the difference between fair value of assets and liabilities as recorded by FBHFL in its books reduced by the issued capital and premium thereon issued by the DHFL by way of amalgamation consideration, as mentioned above and also as reduced by other statutory reserves, free reserves and balance in Profit & Loss Account of transferor companies as stipulated in clause 11.2 and clause 11.3 of the Amalgamation Scheme, are amalgamated with DHFL, amounting to Rs. 26,136 lacs, net of expenses related to amalgamation is credited to Capital Reserve account.

g. Subsequent to the date of amalgamation , proportionate Fair value appreciation surplus amounting to Rs. 5,206 lacs has been amortized out of the above capital reserve on account of repayment / prepayment received of the housing loans portfolio amalgamated on amalgamation as fair value appreciation surplus was directly taken into capital reserves of the company.

h. Had the court approved amalgamation scheme not prescribed the above accounting treatments for transferring of other free reserves and balance of profit and loss account aggregating to Rs. 17,430 lacs, the balance added in P&L account on account of amalgamation and other free reserves would have been lower and Capital Reserve account would have been higher by such amount.

i. Since the figures of previous year does not include the financials of the amalgamating companies, the figures are not comparable with those of the current year.

12 In the opinion of the Board, the assets of the company have a value on realization in the ordinary course of business atleast equal to the amount at which they are stated, net of contingency provisions.

13 The Company''s income tax assessment has been completed upto assessment year 2010-11. In respect of amalgamating company, additional demands have been raised by the department which are pending in appeal at various forums. Company has partially deposited the additional tax so demanded under protest. No provision has been made in the books against such demands as the company believes that the cases will be decided in its favour based on legal advice and similar precedent case laws available (Refer Note 32).

14 INTEREST RATE SWAPS

"In compliance with Asset Liability Management Policy, the company had in past entered into interest rate swaps of notional value aggregating to Rs. 9,500 Lacs to hedge its interest rate risk which were designated as fair value hedges, in accordance with the generally accepted accounting principles.

The changes in the fair value of these derivatives are recorded in the income statement, together with any changes in the fair value of the underlying asset or liability that are attributable to the hedged risk. The Mark to Market (MTM) losses on these swaps recognized in past, is amortized over the period of the hedges. Accordingly, net gain in current year on hedging of interest rate swaps and write back of MTM losses amounting to Rs. 27 lacs (Rs. Nil) has been adjusted in "Interest and Finance charges".

15 The Company operates under a single (primary) business segment viz. "Providing loans to retail customers for construction or purchase of residential property and loans against property". Further, the Company is operating in a single geographical segment. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard on Segment Reporting (AS-17) notified u/s 211(3C) of the Companies Act, 1956 are not applicable to the Company.

16 CONTINGENT LIABILITY: (Rs. in Lacs)

31.03.2013 31.03.2012

Guarantees provided by the Company 9,996 22,473

Claims against the Company not acknowledged as debts 83 54

Income Tax Demand in respect of amalgamating company (Net of amount deposited under protest Rs. 67 lacs) 430 -

17 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 49,100 lacs (Rs. 160 lacs).

18 Capital Work in Progress includes Rs. 25,871 lacs (Rs. 17,618 lacs) paid as advance consideration for acquiring office premises under construction.

19 The Company has paid dividend Rs. 8 lacs (Rs. 8 lacs) and Rs. 1 lac (Rs. 1 lacs) as tax on distribution of dividend thereon to new shareholders on account of Final Dividend for the year 2011-12 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.

20 The managerial remuneration including perquisites, Rs. 175 lacs (Rs. 175 lacs) paid to Chairman and Managing Director and Rs. 30 lacs (Rs. 30 lacs) as commission to other non executive directors.

21 RELATED PARTY TRANSACTIONS

As per Accounting Standard (AS 18) on "Related Party Disclosures" details of transactions with related parties as defined therein are given below:

A) List of related parties with whom transactions have taken place during the year and relationship:

1) COMPANIES

(i) Subsidiary Companies

a. DHFL Holdings Pvt. Ltd.*

b. First Blue Home Finance Ltd.* (formerly known as Deutsche Postbank Home Finance Ltd.)

* As per the Scheme of Amalgamation, erstwhile First Blue Home Finance Limited and DHFL Holdings Private Limited as approved by the respective Hon''ble High Court''s of Judicature at Bombay and Delhi read with Note 27 was amalgamated with the Company

(ii) Associate Companies

a. DHFL Vysya Housing Finance Ltd.

b. DHFL Property Services Ltd.

c. Aadhar Housing Finance Pvt. Ltd.

d. DHFL Insurance Services Ltd.

e. Arthveda Fund Management Pvt. Ltd.

f. Dish Hospitality Pvt. Ltd.

g. Wadhawan Holdings Pvt. Ltd.

h. Wadhawan Retail Pvt. Ltd.

i. Avanse Financial Services Pvt Ltd.

j. DHFL Sales and Services Ltd.

2) KEY MANAGEMENT PERSONNEL

a. Shri Kapil Wadhawan Chairman & Managing Director

b. Shri Anil Sachidanand President

c. Shri Anoop Pabby President

d. Shri Rajeev Sathe Chief Operating Officer

22 NHB, vide its letter dated 9th October, 2012 has levied under section 52A of the National Housing Bank Act, 1987 a penalty of Rs. 5,000/- (Rupees five thousand), which has been paid by the Company, in relation to section 29C of the National Housing Bank Act, 1987 on the Company for the years 2007-08 & 2010-11.

23 Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Since the figures of previous year do not include the financials of the amalgamating companies, the figures are not comparable with those of the current year. Figures in brackets represent previous year''s figures. Further, the income and expense, fixed assets movements for the year of the amalgamating companies have been added line by line in the statement of profit and loss account, fixed assets (Refer note 12) and cash flow statement.


Mar 31, 2012

1 CORPORATE INFORMATION

Dewan Housing Finance Corporation Limited ('DHFL'), 'the Company' was incorporated in India on 11th April, 1984 and is carrying on the business of providing loans to retail customers for construction or purchase of residential property and loans against property. The Company is registered with National Housing Bank under Section 29A of the National Housing Bank Act, 1987. DHFL 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 and 2 representative offices in UAE and UK.

The Company has 3 subsidiaries viz. DHFL Holdings Private Limited, First Blue Home Finance Limited and First Blue Financial Consultants Limited.

(Rs. in lacs)

31.03.2012 31.03.2011

2 Contingent Liability

Guarantees provided by the Company 22,473 7

Claims against the Company not acknowledged as debts 54 28

2.1 The Company has given corporate guarantee in favour of intitutional subscriber of secured, redeemable, non convertible debentures issued by its subsidiary First Blue Home Finance Limited fo Rs. 25,000 lacs and interest thereon.

3 Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 160 lacs (Rs. 5,768 lacs).

4 Capital Work in Progress includes Rs. 17,618 lacs (Rs. 16,000 lacs) paid as advance consideration for acquiring office premises under construction, and Rs. 450 lacs paid in lieu of part consideration towards sale of leasehold land in earlier years.

5 The Company has paid dividend of Rs. 8 lacs (Rs. 659 lacs) and Rs. 1 lac (Rs. 112 lacs) 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.

6 The managerial remuneration including perquisites, Rs. 168 lacs (Rs. 157 lacs) paid to Chairman and Manging Director and Rs. 30 lacs (Rs. 30 lacs) as comission to other directors.

7 As per Accounting Standard (AS-18) on "Related Party Disclosures" details of transactions with related parties as defined therein are given below:

A) List of related parties with whom transactions have taken place during the year and relationship:

1) COMPANIES

(i) Subsidiary Companies

a. DHFL Holdings Pvt. Ltd.

b. First Blue Home Finance Ltd.

(formerly known as Deutsche Postbank Home Finance Ltd.)

c. First Blue Financial Consultants Ltd.

(formerly known as DPB Financial Consultants Ltd.)

(ii) Associate Companies

a. DHFL Vysya Housing Finance Ltd.

b. DHFL Property Services Ltd.

c. Aadhar Housing Finance Pvt. Ltd.

d. DHFL Insurance Services Ltd.

e. Arthveda Fund Management Pvt.Ltd.

f. Dish Hospitality Pvt. Ltd.

g. Wadhawan Holdings Pvt. Ltd. h. Wadhawan Retail Pvt. Ltd.

2) KEY MANAGEMENT PERSONNEL

a. Shri Kapil Wadhawan Chairman & Managing Director

b. Shri Anil Sachidanand Chief Executive Officer

c. Shri Rajeev Sathe Chief Operating Officer

d. Shri Anoop Pabby Head Corp Strategy Group

8 Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Accordingly, amounts and other disclosure for the previous year are included as an integral part of the current year's financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.

9 Figures in brackets represent previous year's figures.


Mar 31, 2011

1. During the year, the Company obtained approval of 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 Promoters/Promoter Group and Caledonia Investment Plc. The Committee of the Board of Directors has from time to time, issued and allotted shares along with Equity Shares under ESOS scheme as under:

(a) On 2nd June, 2010, issued and allotted to QIBs 1,68,69,095 Equity Shares 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. 37,500 lacs.

(b) On 12th June, 2010, issued and allotted to Promoters/Promoter Group 40,00,000 Equity Shares 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. 8,892.00 lacs.

(c) On 12th June, 2010, issued and allotted to Caledonia Investment Plc 10,00,000 Equity Shares 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. 2,223.00 lacs.

(d) During the year, the Company has allotted, from time to time, 291,930 number of Equity Shares of Rs. 10/- each to various eligible employees under (ESOS 2008) at a price of Rs. 53.65 per Equity Share (including a premium of Rs. 43.65 per Equity Share) aggregating to Rs. 156.62 lacs as approved in the AGM dated 23rd July, 2007 and allotted at the reconsidered price approved in the EOGM dated 31st March, 2009.

(e) During the year, the Company has allotted, from time to time, 238,833 number of Equity Shares of Rs. 10/- each to various eligible employees under (ESOS 2009) at a price of Rs. 141/- per Equity Share (including a premium of Rs. 131/- per Equity Share) aggregating to Rs. 336.75 lacs as originally approved in the AGM dated 23rd July, 2007.

2. Non Convertible Debentures (NCD) amounting to Rs. 119,066.64 lacs (Rs. 63,716.61 lacs) are secured /to be secured by way of first charge as per note B-4 herein below and are redeemable at par, in one or more installments, on various dates, with the earliest redemption being 23rd May, 2011 and the last being 22nd October, 2020.

3. The Company has raised Rs. 58,000.00 lacs through issue of long term Unsecured, Redeemable, Non Convertible Debentures. These Debentures are redeemable at par between 28th December, 2012 and 31st March, 2021. These Debentures are Sub-ordinate to present and future senior debt holders of the Company and qualifies as Tier II Capital under the NHB Guidelines.

4. Secured term loans from the National Housing Bank, other Banks, International Finance Corporation (IFC Washington), Asian Development Bank (ADB, Manila), Financial Institutions and Secured Non Convertible Debentures are secured/to be secured by way of first charge to and in favour of participating banks, Institutions, National Housing Bank and Debenture Trustees jointly ranking pari passu inter-se, on the Company's whole of the present and future book debts outstanding, investments including all the receivables of the Company and other movable assets wherever situated excluding SLR investments read with Note no. 8 hereinafter. They are further secured / to be secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties, to Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture trustees, and are also guaranteed by some of the present and earlier directors of the Company.

5. Term loans include cash credit received from banks Rs. 99.11 lacs and are secured on pari passu basis with other term loans.

6. As certified by the Management, loans given by the Company are secured by Equitable Mortgage/Registered Mortgage of the Property and Assets Financed and/or assignment of Life Insurance Policies and/or Personal Guarantees and/or undertaking to create a security and are considered appropriate and good.

7. The Company had earlier allotted 30 lacs Non Convertible Redeemable Preference Shares (NCRPS), of Rs. 10/- each at a premium of Rs. 90/- per share, aggregating to Rs. 3,000 lacs, carrying dividend @ 1% per annum on 10th December, 2007 which were redeemable at the end of 36 months from the date of allotment @ Rs. 136/- per share. During the year, the Company has redeemed all the above NCRPS @ Rs. 136/- per share and has utilised the share premium for redemption on pro rata basis.

8. As the National Housing Bank directives require all HFC's accepting public deposits to create a floating charge on the statutory liquid assets maintained in favour of depositors through the mechanism of a trust deed. The Company has appointed in earlier year a SEBI approved trustee Company i.e. GDA Trustee and Consultancy Ltd. as trustee for the above by executing the trust deed and has created necessary required charge.

9. The Non Performing Assets (NPA) consisting of principal loans outstanding where payments of EMI/PEMI were in arrears for 90 days or more amounted to Rs. 9,429.07 lacs (Rs. 10,048.28 lacs). As per prudential norms prescribed by the NHB, the Company is required to carry a contingency provision of Rs. 3,641.60 lacs (Rs. 1,911.06 lacs) in respect of Non Performing Housing Loan, Non-Housing Standard Assets and Other Loan Assets. The Company has also provided for Rs. 59.15 lacs (Rs. 125.51 lacs) in respect of diminution in the value of Investment. The Company has Written off Rs. 144.05 lacs (Rs. 98.34 lacs) as bad debts and by way of one time settlement to recover some of its NPA and Loss Accounts. The Company has withdrawn Rs. 144.05 lacs (Rs. 98.34 lacs) from contingency provisions created out of profits of earlier years. The Company has made, during the year, provision of Rs. 900 lacs (Rs. 850 lacs) for contingencies and has excess provision over and above the requirements of the guidelines on Prudential Norms issued by the National Housing Bank (NHB). The amount of required provision based on Non Performing Assets is as hereunder:

10. Composite Loans sanctioned (i.e. loans allowed for purchase of plot and self construction of house) on or before 31st March, 2009, in which construction has not started till 31st March, 2011, as per the information available with the Company, is excluded from Housing Loans and regrouped under Other Loans (Non Housing) in Schedule 'G', outstanding as on 31st March, 2011 aggregating to Rs. 1,097.05 lacs. The previous year figures of Housing Loans and Other Loans have not been regrouped, hence are not comparable.

11. In terms of the requirement of the National Housing Bank (NHB) Circular No.NHB (ND)/DRS Pol. No. 37/2010-11 dated 24th December, 2010, the Company has met the said requirements as under by utilizing excess provisions made in the earlier period and by further providing during the year:

i. 0.40% on all Standard Assets in respect of all loans other than individual housing loans, and

ii. 2% on total outstanding Standard Assets in respect of Housing Loans given on Dual Interest Rate Scheme,

12. Retirement Benefit Plans

ii. As required under Accounting Standard 15 (AS 15 Revised, 2005) the Company has made full provision for future gratuity liability & leave encashment liability payable at the time of retirement as on 31st March, 2011. On the basis of Gratuity and GLES report under Accounting Standard 15 (AS 15 Revised, 2005) provided by LIC of India, the Company has made necessary full contribution to LIC of India of its own liabilities as well as liabilities of its Subsidiary Company, DHFL Property Services Limited.

13. Employee Stock Option Scheme:

Employee Stock Option Scheme 2008 (ESOS-2008) was implemented by the Company. 14,22,590 Equity Share options were granted under (ESOS-2008) in 2008-09 to the employees as approved by the Remuneration and Compensation Committee of Directors of the Company at Rs. 53.65 per share, the reconsidered price approved in the EOGM dated 31st March, 2009.

Employee Stock Option Scheme 2009 (ESOS-2009) was implemented by the Company. 12,75,000 Equity Share options were granted under (ESOS-2009) in 2009-10 and additional 73,470 Equity Share options were granted under (ESOS-2009) in 2010-11 to the employees as approved by the Remuneration & Compensation Committee of the Directors of the Company at Rs. 141/- per share, the price approved in the Remuneration and Compensation Committee meeting held on 25th November, 2009.

During the financial year 2010-11, under (ESOS-2008), 372,260 options vested with eligible employees, 291,930 Equity Share options were exercised leaving balance of 80,330 Equity Share options exercisable at the end of the year and 184,222 Equity Share options lapsed during the year while 614,310 Equity Share options were unvested at the end of the year.

During the financial year 2010-11, under (ESOS-2009), 346,803 options vested with eligible employees, 238,833 Equity Share options were exercised leaving balance of 107,970 Equity Share options exercisable at the end of the year and 92,270 Equity Share options lapsed during the year while 877,147 Equity Share options were unvested at the end of the year.

Method used for accounting for share based payment plan:

The Company has used intrinsic value method, which is the amount by which quoted market price of the underlying shares exceeds the exercise price of the Equity Share options, for accounting the compensation cost of its options to employees of the Company on date of the grant. As the Equity Share options under (ESOS-2008) were granted at the market price, the intrinsic value of the Equity Share option was NIL. However for Equity Share options under (ESOS-2009) the intrinsic value of such options was Rs. 43.95.

Fair Value methodology:

The fair value of options used to compute ESOP adjusted net income and earnings per Equity Shares have been estimated using Black Scholes Option Pricing model as provided by independent consultants and relied upon by the Management and the auditors.

14. During the year, the Company has subscribed 500 lac fully paid up Equity Shares of Rs. 10/- each for cash at par of Aadhar Housing Finance Private Limited. Aadhar Housing Finance Private Limited is a joint venture between the Company, its subsidiary DHFL Vysya Housing Finance Limited and International Finance Corporation (private sector arm of World Bank) with shareholding of 50%, 30% and 20% respectively to promote financing of low cost housing in rural and semi urban areas of the selected states of the country.

15. During the year, the Company has promoted, subscribed and acquired 2,160.10 lac fully paid up Equity Shares of Rs. 10/- each for cash at par of DHFL Holdings Private Limited, being 100% shares of the Company and promoted as a Special Purpose Vehicle for acquiring and holding 21,99,45,206 Equity Shares of Rs. 10/- each fully paid up, representing 67.56% of the Equity of Deutsche Postbank Home Finance Limited by investing Rs. 73,552.47 lacs.

16. During the year, a Company led consortium acquired 100% Equity Share capital of Deutsche Postbank Home Finance Limited from BHW Holding AG, Germany under a share purchase agreement whereby the Company has acquired above shares through DHFL Holdings Private Limited.

17. Unsecured Loans includes short term loans (Deposits and Commercial Papers) due and payable within one year Rs. 34,299.13 lacs (Rs. 6,374.28 lacs).

18. During the year, the Company has utilized Rs. 2,949.52 lacs (Rs. 360 lacs) out of share premium account in accordance with Section 78 of the Companies Act, 1956 towards premium payable on the redemption of Non Convertible Redeemable Preference Shares of the Company.

19. Other income includes Rent income of Rs. 141.59 lacs (Rs. 117.77 lacs) and Miscellaneous income of Rs. 47.20 lacs (Rs. 81.54 lacs).

21. The Company has sold during the year, 13,21,510 number of shares being part of its strategic investment in erstwhile Promoter Group Company for Rs. 3,585.77 lacs thereby earning exceptional tax free income of Rs. 3,542.95 lacs.

22. The Company has created a Contingency Reserve of Rs. 3,500 lacs in view of the above exceptional income to provide for future contingencies.

23. As per Accounting Standard (AS 18) on "Related Party Disclosures" details of transactions with related parties as defined therein are given below:

A) List of related parties with whom transactions have taken place during the year and relationship:

1) COMPANIES

(i) Subsidiary Companies

(a) DHFL Vysya Housing Finance Ltd.

(b) DHFL Property Services Ltd.

(c) DHFL Holdings Pvt. Ltd.

(d) Aadhar Housing Finance Pvt. Ltd.

(e) Deutsche Postbank Home Finance Ltd.

(f) DPB Financial Consultants Ltd.

(ii) Associate Companies

(a) DHFL Insurance Services Ltd.

(b) DHFL Venture Capital Fund ( Trust)

(c) DHFL Venture Capital India Pvt. Ltd.

(d) DHFL Venture Trustee Company Pvt. Ltd.

(e) Dish Hospitality Pvt. Ltd.

(f) Wadhawan Holdings Pvt. Ltd. [WHPL]

(g) Wadhawan Retail Pvt. Ltd.

(h) Wadhawan Housing Pvt. Ltd.

(i) Caledonia Investments Plc.

2) OTHERS

(a) Shri Dheeraj Wadhawan

(b) Smt. Aruna Wadhawan

(c) Smt. Pooja Wadhawan

3) KEY MANAGEMENT PERSONNEL

(a) Shri Kapil Wadhawan Chairman & Managing Director

(b) Shri Anil Sachidanand Chief Executive Officer

(c) Shri Rajeev Sathe Chief Operating Officer

24. The Company's Income Tax assessment has been completed up to Assessment Year 2008-09. Additional demands of Rs. 195.84 lacs have been raised by the department which are pending in appeal. The Company has deposited additional tax so demanded which is pending in appeals. No provision has been made as the Company has been advised that appeals will be allowed, in due course of time, based on similar case laws on the subject and there is no need to make any provision for the same and refunds are expected to be received.

25. The Company has derecognized Interest income on Non-Performing Assets as on 31st March, 2011 of Rs. 438.89 lacs (Rs. 610.33 lacs).

26. Dividend includes Rs. 161.22 lacs (Rs. 103.02 lacs) and Interest income includes Rs. 58.17 lacs (NIL) received from Subsidiary Company. Interest payment includes Rs. NIL (Rs. 40.21 lacs) paid to Subsidiary Company.

27. Provision for Taxation includes Rs. 6,460.89 lacs (Rs. 5,193.58 lacs) provision for current year tax, and Rs. 1,170.45 lacs (Rs. - 43.58 lacs) deferred tax liability for the year.

28. The main business of the Company is to provide loans for the purchase or construction of residential houses and all other activities of the Company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS 17) on "Segment Reporting", and under paragraph 29 (2) of the Housing Finance Companies (NHB) Directions, 2010, which needs to be reported.

29. Estimated amount of contracts remaining to be executed on capital account and not provided for (net of advances) is Rs. 5,767.74 lacs (Rs. 5,557.99 lacs).

30. Capital Work in Progress includes Rs. 16,000.00 lacs paid as advance consideration for acquiring office premises under construction, Rs.157.58 lacs paid for software and Rs.450.00 lacs paid in lieu of part consideration towards sale of leasehold land in earlier years.

31. The Company has paid dividend of Rs. 659.36 lacs and Rs.112.06 lacs as tax on distribution of dividend to new shareholders on account of final dividend for the year 2009-10 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.

32. There is no amount due and payable to 'Suppliers' registered under the Micro, Small and Medium Enterprises Development Act, 2006 at the end of the year. No interest has been paid/is payable by the Company during/for the year to these 'Suppliers'. The above information takes into account only those suppliers who have responded to the inquiries made by the Company for this purpose.

33. Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Accordingly, amounts and other disclosure for the previous year are included as an integral part of the current year's financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.

34. Figures in brackets represent previous year's figures.

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