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Directors Report of Indiabulls Housing Finance Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the Tenth Annual Report together with the audited statement of accounts of the Company for the financial year ended March 31, 2015

Financial Results

The financial highlights of the Company, for the financial year ended March 31, 2015, are as under -

Amount (in Rs.)

Particulars Year ended Year ended March 31, 2015 March 31, 2014

Profit before Depreciation and amortisation expense 25,511,744,125 19,084,400,506

Less: Depreciation and amortisation expense 180,120,868 76,526,559

Profit before Tax 25,331,623,257 19,007,873,947

Less: Provision for Tax 5,549,349,492 3,907,892,095

Profit after Tax 19,782,273,765 15,099,981,852

Add: brought forward

balance 481,135,068 2,208,792,471

Less: Adjustment on account of Depreciation (Net of tax benefit) 36,536,103 -

Amount available for appropriation 20,226,872,730 17,308,774,323

Appropriations:

Interim Dividend paid on Equity Shares (Rs. 26.00 Per Share (Previous Year Rs. 20.00 Per Share)) 9,104,090,057 6,650,135,713

Interim Dividend payable on Equity Shares (Rs. Nil Per Share (Previous Year Rs. 9.00 Per Share)) - 3,006,381,987

Dividend for the previous year on Equity Shares issued after the year end pursuant to ESOPs Allotment 1,067,652 -

Corporate Dividend Tax on:

- Interim Dividend paid on Equity Shares 1,425,967,604 1,130,190,566

- Interim Dividend payable on Equity Shares - 510,934,619

- Dividend for the previous year on Equity Shares issued after the year end pursuant to ESOPs Allotment 181,448 -

Transferred to General Reserve - 1,510,000,000

Transferred to Reserve U/s 36(1)(viii)(Considered as eligible transfer to Special Reserve U/s 29C of the National Housing Bank Act, 1987) 1,860,000,000 1,500,000,000

Transferred to Special Reserve (U/s 29C of the National Housing Bank Act, 1987) 2,096,454,752 1,519,996,370

Transferred to Additional Reserve (U/s 29C of the National Housing Bank Act, 1987) 1,500,000,000 1,000,000,000

Balance of Profit Carried Forward 4,239,111,217 481,135,068

KEY FINANCIAL HIGHLIGHTS: FY14-15 (Consolidated)

FY 14-15 FY 13-14 Growth (%)

Total Revenues (Rs. Cr.) 7,270.4 5,904.8 23.1

NII (Rs. Cr.) 3,179.5 2,607.5 21.9

PAT (Rs. Cr.) 1,901.2 1,568.5 21.2

EPS (Rs.) 55 48 14.6

CRAR% (Standalone) 18.4 19.1

FINANCIAL AND OPERATIONAL HIGHLIGHTS

Rating Upgrades

* In the first half of the year IBHFL was upgraded by all the four rating agencies that rate the company.

* IBHFL is rated AAA by CARE Ratings and Brickwork Ratings.

* IBHFL is rated AA by Crisil, a Standard & Poor's company, and ICRA, an associate of Moody's Investor Service.

* In FY 2014-15, we also got a short term rating from India Ratings, a Fitch group company, at the highest A1 level. We are thus rated by all five rating agencies in India.

Asset Growth

* Assets continue to grow steadily on back of long-term, low-risk mortgage loans. The total Assets under Management stood at Rs. 52,235 Crore, up 27% from Rs. 41,169 Crore.

* Outstanding securitized loan book was Rs. 6,195 Crore at the end of FY 2014-15 (previous year Rs 5,724 Crore), on which a spread of 3.4% p.a. is to be earned over the life of the loan.

Asset Composition

* 76% of the loan assets are mortgage loans.

* Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of Rs. 24 lacs and at average LTV of 71% at origination.

* Loans against property are disbursed at an average ticket size of Rs. 68 lacs and at an average LTV of 49% at origination.

* The loan profiles of both the home loans and loans against property are conservative. The loans are monthly amortizing, secured against mortgage on the property financed and are given out at moderate LTV levels.

* 82% of retail mortgage loans, consisting of the above home loans and loans against property are sourced in- house.

Home Loans: Streamlined Loan Fulfillment

* In FY 2015, the ISO certification (ISO 9001:2008) awarded to the Company's document management system was reaffirmed.

* The Company has a well-trained, in-house Direct Sales' Team of over 2000 people to promptly attend to prospective customers.

Improving Liability Profile

* In keeping with its stated strategy, the Company continues to maintain healthy levels of liquidity with cash and bank balances and current investments adding up to Rs. 9,631 Cr at the end of FY 14-15.

* During the FY 14-15 the company raised USD 200 mn through ECB, drawing down the complete RBI approved limit.

* Funds raised through bonds constituted 31% of the Company's incremental borrowings in FY 14-15.

* The Company has further reduced its reliance on short-term borrowings from commercial paper to 7%.

Diversified Borrowing Program

* Amongst its lenders, the Company now counts 132 strong relationships: 26 PSU banks, 17 Private and Foreign banks and 89 Mutual Funds, Provident Funds, Pension Funds, Insurance Companies and others.

Optimally Matched Balance Sheet

* The assets and liabilities have been optimally matched with no mismatch till 5 years.

* The maturity profile reflects adjustments for prepayments and renewals in accordance with the guidelines issued by National Housing Bank.

Stable Asset Quality

* Gross non-performing loans as at March 31, 2015 amounted to Rs. 442.8 Cr. This is equivalent to 0.85% of the portfolio.

* Net non-performing loans as at March 31, 2015 amounted to Rs. 185.9 Cr. This is equivalent to 0.36% of the portfolio.

* The company has a prudent approach to creating loan provisions and carries total provisions, across standard assets provision and sub-standard asset provisions of Rs. 615.5 Cr. These total provisions are Rs. 221 Cr above the regulatory requirements.

* The Company has been successful in maintaining stable, low levels of NPA as low-risk mortgage portfolio increases the asset base, while contributing very low incremental delinquencies.

* Moderate levels of LTV and emphasis on borrower cash flow stability during loan appraisal have ensured that the credit quality in loans against property portfolio also remains high.

* An experienced underwriting team and the in-house sourcing and collection teams ensure control over loan sourcing, credit appraisal and portfolio management.

Bank Borrowings

As at March 31,2015, the Company's outstanding bank loans stood at Rs. 28,138 crs (excluding the USD 200 mn of External Commercial Borrowing (ECB) availed during the financial year from various financial institutions) vis-a-vis Rs. 21,710 crs as at March 31, 2014. The Company's bank borrowings continue to enjoy a rating of AAA, signifying high degree of safety for timely servicing of debt obligations.

Non-Convertible Debentures (NCD) and Commercial Paper (CP)

As at March 31, 2015, the Company's outstanding secured NCDs stood at Rs. 13,548 crs vis-a-vis Rs. 9,460 crs as at March 31, 2014. The Company's secured NCDs have been listed on the Wholesale Debt Market segment of NSE / BSE and have been assigned 'AAA' rating from both CARE and Brickwork Ratings and 'AA ' from CRISIL.

As at March 31, 2015, the Company's outstanding subordinated debt and perpetual debt stood at Rs. 980 and 100 Cr. The debt is subordinate to present and future senior indebtedness of the Company and has been assigned the 'AA ' and 'AAA' rating by CARE and Brickworks Ratings respectively. Based on the balance term to maturity, as at March 31, 2015, Rs. 995.62 Cr of the book value of subordinated and perpetual debt is considered as Tier II under the guidelines issued by the Reserve Bank of India (RBI) and National Housing Bank (NHB) for the purpose of capital adequacy computation.

There are no NCDs which have not been claimed by the investors or not paid by the Company after the date on which the NCD became due for redemption.

The company's outstanding commercial paper stood at Rs. 3,207 crs as at March 31,2015. The commercial paper program of the company enjoys a rating of A1 signifying highest degree of safety for timely servicing of debt obligations.

Regulatory Guidelines / Amendments

The Company has complied with directions from the RBI and the NHB regarding Accounting Standards, Prudential norms for asset classification, income recognition, provisioning, capital adequacy and credit rating.

Risk Management Framework

The Company has a Risk Management Frame work that provides guidelines and standard practices for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises of members of its senior management team, who have many years of experience in the industry and have put in place preventive mechanisms to contain various risks. The RMC met multiple times during the year ending 31 March 2015 and kept an active watch on the emergent risks the Company was exposed to. The RMC put in place or enhanced the control measures to contain these risks. The Company has a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to contain and mitigate risk that arise from time to time.

Codes and Standards

The Fair Practices Code (FPC) recommended by sector regulator, the National Housing Bank (NHB) as well as the RBI seek to promote good and fair practices by setting minimum standards in dealing with customers while doing lending business. The NHB has also issued 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.

Marketing and Distribution

The Company has taken a number of initiatives through the financial year 2014-15 to enhance brand awareness and to reach out to a greater number of customers. The company launched a 360 degree campaign -'Celebrating the spirit of the Hardworking Indian' across mediums including television, print and digital. The campaign was well received by the potential customers and other stakeholders. Further to capitalize on the ever growing utility of digital media and social networking, the company enhanced its visibility and reach by associating with digital partners, presence on websites, social media and the use of email marketing. The company further participated in more than 40 property/consumer expos along with organizing 'Aawas' the Indiabulls budget property show.

Cross Selling and Distribution of Financial Products and Services

The financial year 2014-15, saw the Company further expanding its branch network, and widen its reach on the community. The Company now has 220 branches spread across 18 states. State of the art Customer Care set up helps speedy resolution of customer queries and promptly attends to any loan requirements. Survey calling, where feedback is taken from existing and new customers also helps in continuous process improvement and generation of new leads.

Training and Human Resource Management

The Company aims to build a team of dedicated employees who work with passion and a sense of belonging and play a defining role in accelerating the Company's growth.

Trainings for more than 4900 employees were conducted in the last financial year covering various aspects such as sales excellence, customer service, data analysis, credit risk analysis, etc. We have a state of the art facility spread over 11,000 sq.ft. at our corporate office at Parel, Mumbai, where periodic training sessions are organized by the Training Department.

DIVIDEND

In keeping with the Company's policy of rewarding its shareholders, the Board of Directors of the Company, had, for the year 2014-15, declared three interim dividends aggregating to Rs. 26/- per share on shares of face value Rs. 2/- each (Rs. 8/- for the quarter ended June 30, 2014, Rs.9/- for the quarter ended September 30, 2014 and Rs.9/- for the quarter ended December 31,2014), with the total outflow of Rs. 1,053.01 Cr (inclusive of Corporate Dividend Tax).

The Board of Directors of the Company, had, in its meeting held on April 24, 2015, declared an interim dividend of Rs. 9/- per share of face value of Rs. 2/- each, for the Financial Year 2015-16. Further, the Board of Directors of the Company, had, in its meeting held on July 21, 2015, declared second interim dividend of Rs. 9/- per share of face value of Rs. 2/- each, for the Financial Year 2015-16.

During the year, the unclaimed dividend pertaining to the financial year ended March 31, 2008, got transferred to Investor Education and Protection Fund after giving due notice to the members.

PROMOTERS DE-CLASSIFICATION

To impart greater focus and undivided accountability at the leadership level and to rationalize operations of the diverse businesses of the Indiabulls group, so as to put the Company firmly on the growth path, the promoters, during the year under review, had mutually decided to reorganize the management control of different group companies amongst themselves. As part of the restructuring, Mr. Sameer Gehlaut, Chairman of the Company and the entities promoted by him, namely, Orthia Land Development Private Limited, Orthia Developers Private Limited, Cleta Properties Private Limited, Cleta Buildtech Private Limited, Inuus Infrastructure Private Limited and Inuus Land Development Private Limited have continued as Promoters / Promoter Group / PACs with the promoters of the Company.

Further, with effect from July 18, 2014, Mr. Rajiv Rattan and the entities promoted by him, namely, Priapus Properties Private Limited, Priapus Real Estate Private Limited, Priapus Developers Private Limited, Priapus Constructions Private Limited and Mr. Saurabh Kumar Mittal and the entities promoted by him, namely, Hespera Infrastructure Private Limited, Hespera Properties Private Limited, Hespera Real Estate Private Limited, Hespera Realty Private Limited and Hespera Realcon Private Limited, have ceased to be the Promoters / Promoter Group / PACs with the promoters of the Company.

DIRECTORS

To achieve the highest standards of Corporate Governance in its management, and to introduce a true sense of professionalism in the Board of the Company, during the financial year 2014-15, the Board of Directors of the Company (Board) was re-constituted with the appointments of Justice Bisheshwar Prasad Singh (Retd. Justice Supreme Court of India), Justice Surinder Singh Nijjar (Retd. Justice Supreme Court of India), Dr. Kamalesh Shailesh Chandra Chakrabarty (Retd Deputy Governor RBI), Brig Labh Singh Sitara (Ex-army official and Dhyanchand award winner sportsman) as Independent Directors of the Company and the appointment of Mrs. Manjari Ashok Kacker (Ex-Member CBDT), as Non-Executive Director of the Company and cessation of Mr. Rajiv Rattan and Mr. Saurabh Kumar Mittal, Non-Executive Directors and of Mr. Karan Singh Khera, Mr. Aishwarya Katoch and Mr. Joginder Singh Kataria, Independent Directors. The Board has placed on record its appreciation for the contributions made by these directors, during their respective tenures of office.

All the present Independent Directors of the Company have given declaration that they meet the criteria of independence laid down under Section 149 (6) of the Act and Clause 49 of the Listing Agreement.

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum and Articles of Association of the Company, Mr. Ajit Kumar Mittal (DIN: 02698115) and Mr. Ashwini Omprakash Kumar (DIN: 03341114), Directors of the Company, retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment. The Board recommends their re-appointment.

The present composition of the Board along with the brief resume of the Directors proposed to be appointed/ reappointed, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/chairmanships of Board Committees, are provided in the Report on Corporate Governance forming part of this Annual Report.

SHARE CAPITAL / ESOP SCHEMES

The paid up equity share capital of the Company as on March 31, 2015, was Rs. 71,11,28,932 comprising of 35,55,64,466 equity shares of Rs. 2/- each. Subsequently, from April 1,2015 till date, the Company had allotted 67,11,254 equity shares of face value Rs. 2/- each (a) against conversion of 66,43,700 warrants (ISIN No.: INE148I13017) and (b) exercise of 67,554 stock options under various ESOP Schemes of the Company, as a result of which the paid up equity share capital of the Company stands increased to Rs. 72,45,51,440 /- comprising of 36,22,75,720 equity shares of Rs. 2/- each.

During the year under review, the Company has granted its 1,05,00,000 stock options, under Indiabulls Housing Finance Limited ESOP - 2013, to certain eligible employees, excluding the Promoter Director. The disclosures required to be made under Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, in respect of all existing ESOP Schemes of the Company are set out in the Annexure to this Report.

PUBLIC DEPOSITS

During the year under review, the Company has not accepted any deposits from the public, falling within the ambit of Chapter V of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

LISTING WITH STOCK EXCHANGES

The Equity Shares (ISIN No.: INE148I01020) of the Company, continue to remain listed at BSE Limited and National Stock Exchange of India Limited. The listing fees payable to both the exchanges for the financial year 2015-16 have been paid. The GDRs issued by the Company continue to remain listed on Luxembourg Stock Exchange.

AUDITORS

(a) Statutory Auditors

M/s Deloitte Haskins & Sells LLP (Firm Regn. No. 117366W / W-100018), the statutory auditors of the Company were appointed by the members in their ninth Annual General Meeting, held on 11th August 2014, for a period of three years i.e. until the conclusion of the twelfth Annual General Meeting of the Company. The Company has received a certificate from the Auditors to the effect that their continuation as such from the conclusion of this Annual General Meeting until the conclusion of eleventh annual general meeting is in accordance with the provisions of the Section 141(3)(g) of the Companies Act, 2013. The Board recommends the ratification of the appointment of M/s Deloitte Haskins & Sells LLP, as statutory auditors of the Company till the conclusion of eleventh annual general meeting of the Company.

The Notes to the Accounts referred to in the Auditors' Report are self - explanatory and therefore do not call for any further explanation.

(b) Secretarial Auditors & Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the rules made thereunder, the Company has appointed M/s Jatin Gupta & Associates, a firm of Company Secretaries in practice as its Secretarial Auditors, to conduct the secretarial audit of the Company, for the Financial Year 2014-15. The Company has provided all assistance, facilities, documents, records and clarifications etc. to the Secretarial Auditors for conducting their audit. The Report of Secretarial Auditors for the Financial Year 2014-15, is annexed as "Annexure 1" and forming part of this Report. The Report is self - explanatory and therefore do not call for any further explanation.

CORPORATE SOCIAL RESPONSIBILITY

As part of its initiatives under "Corporate Social Responsibility (CSR)", the Company has undertaken projects in the areas of Health, Education, Sanitation, Nutrition and Rural Development, as per its CSR Policy (available on your Company's website http://www.indiabullshomeloans.com/) and the details are contained in the Annual Report on CSR Activities given in "Annexure 2", forming part of this Report. These projects are in accordance with Schedule VII of the Companies Act, 2013 read with the relevant rules.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Management's Discussion and Analysis Report, for the year under review, is presented in a separate section forming part of this Annual Report.

CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section on Corporate Governance Practices followed by the Company, together with a certificate from a practicing Company Secretary confirming compliance, is presented in a separate section forming part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statement in terms of Section 134 of the Companies Act, 2013:

a) that in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b) that such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently andjudgments and estimates have been made 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 the profit and loss of the company for the year ended on that date;

c) that proper and sufficient care has been taken 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) that the annual financial statements have been prepared on a going concern basis; and

e) that proper internal financial controls were in place and that such financial controls were adequate and were operating effectively.

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

INFORMATION PURSUANT TO SECTION 134 AND SECTION 197 OF THE COMPANIES ACT, 2013 READ WITH THE RELEVANT RULES AND LISTING AGREEMENT

The information required to be disclosed pursuant to Section 134 and Section 197 of the Companies Act, 2013 read with the relevant rules (to the extent applicable) and Listing Agreement, not elsewhere mentioned in this Report, are given in "Annexure A" forming part of this Report.

GREEN INITIATIVES

Electronic copies of the Annual Report 2015 and Notice of the 10th AGM are sent to all the members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2015 and Notice of the 10th AGM are sent in the permitted mode. The Company is providing e-voting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice of the 10th AGM. This is pursuant to section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014 as substituted by Companies (Management and Administration) Amendment Rules, 2015 and Clause 35B of the Listing Agreement. The instructions for e-voting are provided in the Notice.

ACKNOWLEDGEMENT

Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functional areas and the efficient utilization of all its resources for sustainable and profitable growth. Your Directors wish to place on record their appreciation of the contributions made and committed services rendered by the employees of the Company at various levels. Your Directors also wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year.

For and on behalf of the Board of Directors

Date : 5th August, 2015 Sameer Gehlaut Place: Mumbai Chairman


Mar 31, 2014

Dear Shareholders,

The Directors have pleasure in presenting the Ninth Annual Report together with the audited statement of accounts of the Company for the financial year ended March 31, 2014.

Financial Results

The financial highlights of the Company, for the financial year ended March 31, 2014, are as under -

Amount (in Rs.)

Particulars Year ended Year ended March 31, 2014 March 31, 2013

Profit before Depreciation and amortisation expense 19,084,400,506 16,133,276,744

Less: Depreciation and amortisation expense 76,526,559 92,110,194

Profit before Tax 19,007,873,947 16,041,166,550

Less: Provision for Tax 3,907,892,095 3,762,096,996

Profit after Tax 15,099,981,852 12,279,069,554

Add: brought forward balance 2,208,792,471 1,595,235,686

Add: Transfer from Indiabulls Financial Services Limited pursuant to Scheme of Arrangement — 1,295,149,850

Amount available for appropriation 17,308,774,323 15,169,455,090

Appropriations:

Interim Dividend paid on Equity Shares (Rs. 20.00 Per Share (Previous Year Rs. 13.50 Per Share)) 6,650,135,713 4,215,019,939

Interim Dividend payable on Equity Shares (Rs. 9.00 Per Share (Previous Year Rs. 6.50 Per Share)) 3,006,381,987 2,031,322,586

Dividend for the previous year on Equity Shares issued by the Erstwhile Holding Company after the year end pursuant to ESOPs Allotment — 1,291,745

Corporate Dividend Tax on:

– Interim Dividend paid on Equity Shares 1,130,190,566 683,781,610

– Interim Dividend payable on Equity Shares 510,934,619 345,223,274

– Dividend for the previous year on Equity Shares issued by the

Erstwhile Holding Company after the year end pursuant to ESOPs Allotment — 209,554

Transferred to General Reserve 1,510,000,000 1,228,000,000

Transferred to Special Reserve (U/s 29C of the National Housing Bank Act, 1987) 3,019,996,370 2,455,813,911

Transferred to Additional Reserve

(U/s 29C of the National Housing Bank Act, 1987) 1,000,000,000 2,000,000,000

Balance of Profit Carried Forward 481,135,068 2,208,792,471

KEY FINANCIAL HIGHLIGHTS: FY13-14 (Consolidated)

FY 12-13 FY 13-14 Growth (%)

Total Revenues (Rs. Crore.) 4,777.95 5,961.31 24.77%

NII (Rs. Crore.) 2,130.33 2,607.33 22.39%

PAT (Rs. Crore.) 1,266.06 1,568.54 23.89%

EPS (Rs.) 40.19 47.96 19.34%

CRAR% (Standalone) 18.47 19.14

BUSINESS UPDATE

- Return on Equity (RoE) has grown to 27.75%. RoE expected to increase further with growth in business.

- 450% of interim dividend of Rs. 9 per share of face value Rs. 2/- has been declared. With this, the total dividend for FY 2013-14 (including interim dividend of Rs. 20/- already paid) is Rs. 29/- per share of face value of Rs. 2/ - amounting to 1450%, total outflow of Rs. 1,129.76 Crore (inclusive of Corporate Dividend Tax).

FINANCIAL AND OPERATIONAL HIGHLIGHTS Asset Growth

- Assets continue to grow steadily on back of long-term, low-risk mortgage loans. The total Assets under Management stood at Rs. 41,169.40 Crore, up 19.59% from Rs. 34,425.62 Crore.

- During the year, loans amounting to Rs. 4,171 Crore. were sold down.

- With the above sell down, outstanding securitized loan book was Rs. 5,724 Crore. at the end of FY 2013-14, on which a spread of 3.4% p.a. is to be earned over the life of the loan.

Asset Composition

- Home loans, which form the majority of incremental disbursals, are disbursed at an average ticket size of Rs. 24 lacs and at average LTV of 70% at origination.

- Loans against property, which form the remainder of the retail mortgage book, are disbursed at an average ticket size of Rs. 68 lacs and at an average LTV of 49% at origination.

- The loan profiles of both the home loans and loans against property are conservative. The loans are monthly amortizing, secured against mortgage on the property financed and are given out at moderate LTV levels.

- 76% of retail mortgage loans, consisting of the above home loans and loans against property, are sourced in-house. With improving productivity of in-house sourcing team, over 80% of these retail mortgage loans will be sourced in-house in FY15.

Home Loans: Streamlined Loan Fulfillment

- In FY 2014, the ISO certification (ISO 9001:2008) awarded to the Company''s document management system was reaffirmed.

- The Company continues to grow its branch network and now has 205 branches spread across the country.

- The Company has a well-trained, in-house Direct Sales'' Team of over 2,000 people to promptly attend to prospective customers.

Improving Liability Profile

- In keeping with its stated strategy, the Company continues to maintain healthy levels of liquidity with cash and bank balances and current investments adding up to Rs. 7,341.38 Crore at the end of FY 13- 14.

- Funds raised through bonds constituted 26% of the Company''s incremental borrowings in FY 13-14.

- The Company has further reduced its reliance on short-term money to 8% of total borrowings.

Diversified Borrowing Program

- Amongst its lenders, the Company now counts 108 strong relationships: 26 PSU banks, 16 Private and Foreign banks and 66 Mutual Funds, Provident Funds, Pension Funds, Insurance Companies and others.

Optimally Matched Balance Sheet

- The assets and liabilities have been optimally matched with no mismatch till 5 years.

- The maturity profile reflects adjustments for prepayments and renewals in accordance with the guidelines issued by National Housing Bank.

Stable Asset Quality

- Gross non-performing loans as at March 31, 2014 amounted to Rs. 341.69 Crore. This is equivalent to 0.83% of the portfolio.

- Net non-performing loans as at March 31, 2014 amounted to Rs. 147.26 Crore. This is equivalent to 0.36% of the portfolio.

- The Company has been successful in maintaining stable, low levels of NPA as low-risk mortgage portfolio increases the asset base, while contributing very low incremental delinquencies.

- Moderate levels of LTV and emphasis on borrower cash flow stability during loan appraisal have ensured that the credit quality in loans against property portfolio also remains high.

- An experienced underwriting team and the in-house sourcing and collection teams ensure control over loan sourcing, credit appraisal and portfolio management.

Subordinated Debt

During the year, the Company raised Rs. 220.00 Crore through the issue of long-term Unsecured Redeemable Non – Convertible Subordinated Debentures. The Subordinated Debt was assigned a ''AA '' rating from both, CARE and Brickworks Ratings.

As at March 31, 2014, the Company''s outstanding subordinated debt and perpetual debt stood at Rs. 1,064.68 Crore. The debt is subordinate to present and future senior indebtedness of the Company and has been assigned the rating by CARE and Brickworks Ratings. Based on the balance term to maturity, as at March 31, 2014, Rs. 1,008.64 Crore of the book value of subordinated debt is considered as Tier II under the guidelines issued by the Reserve Bank of India (RBI) and National Housing Bank (NHB) for the purpose of capital adequacy computation.

Non Convertible Debentures (NCD) During the year, the Company issued NCD amounting to Rs. 3,703.3 Crore on a private placement basis. The Company''s NCDs have been listed on the Wholesale Debt Market segment of BSE and NSE and have been assigned AA rating from both CARE and Brickwork Ratings and A1 from CRISIL. As at March 31, 2014, NCD outstanding stood at Rs. 9,460.4 Crore. There are no NCDs which have not been claimed by the investors or not paid by the Company after the date on which the NCD became due for redemption.

Loans from Banks during the year, the Company raised term loans amounting to Rs. 8,735 Crore from commercial banks. The Company''s long-term bank loan facilities continue to enjoy a rating of AA , signifying high degree of safety for timely servicing of debt obligations and its short-term bank loan facilities continue to enjoy a rating of A1 signifying highest degree of safety for timely servicing of debt obligations.

Regulatory Guidelines / Amendments

The Company has complied with directions from the RBI and the NHB regarding Accounting Standards, Prudential norms for asset classification, income recognition, provisioning, capital adequacy and credit rating.

Risk Management Framework

The Company has a Risk Management Framework that provides guidelines and standard practices for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises of members of its senior management team, who have many years of experience in the industry and have put in place preventive mechanisms to contain various risks. The RMC met multiple times during the year ending 31 March 2014 and kept an active watch on the emergent risks the Company was exposed to. The RMC put in place or enhanced the control measures to contain these risks. The Company has a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to contain and mitigate risk that arise from time to time.

Codes and Standards

The Fair Practices Code (FPC) recommended by sector regulator, the National Housing Bank (NHB) as well as the RBI seek to promote good and fair practices by setting minimum standards in dealing with customers while doing lending business. The NHB has also issued 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.

Marketing and Distribution

The Company has taken a number of initiatives through the financial year 2013-14 to reach out to a greater number of customers. To capitalize on the ever growing utility of digital media and social networking, the company launched its online campaign on relevant sites and used email marketing to enhance its visibility and garner leads from the digital space. The Company further expanded the inaugural property show started last year, to organize 12 ''Aawas'' property shows in tier I and II cities across the country. This was well appreciated by many of the home buyers as it gave them a good platform to find their dream home at an affordable price.

Cross Selling and Distribution of Financial Products and Services

The financial year 2013-14, saw the Company further expanding its branch network, and widen its reach on the community. The Company now has 205 branches spread across 20 states. State of the art Customer Care set up helps speedy resolution of customer queries and promptly attends to any loan requirements. Survey calling, where feedback is taken from existing and new customers also helps in continuous process improvement and generation of new leads.

Training and Human Resource Management

The Company aims to build a team of dedicated employees who work with passion and a sense of belonging and play a defining role in accelerating the Company''s growth. The Company has recruited laterally from within the industry to bring on capable leaders.

Trainings for more than 2,500 employees were conducted in the last financial year covering various aspects such as sales excellence, customer service, data analysis, credit risk analysis, etc. We have a state of the art facility spread over 25,000 sq.ft. at our corporate office at Parel, Mumbai, where periodic training sessions are organized by the Training Department.

INDIAN MORTGAGE MARKET

- Lower mortgage penetration, measured by mortgage to GDP ratio, stands at 9% for India. This is quite low when compared with other developing nations, with the same ratio for China at 20% and Malaysia at 29%. The mortgage to GDP for some of the developed nations is close to 100%, all of which points to the huge opportunity for growth in the Indian mortgage market.

- The Indian mortgage industry at an inflection point and is estimated to grow five-fold in next 10 years.

- This growth is driven by increasing urbanization, rising income levels and break up of traditional joint family structures.

- This growth in demand and increasing competition between banks, housing finance companies and non- banking financial companies for the secured mortgage market has made financing readily available. This in- turn acts as an enabler for the growth of the sector.

HOME LOAN SECTOR GROWTH

- The home loan industry is expected to grow at 18- 20% CAGR for the next five years, on a large base of more than Rs. 8,60,000 Crore in FY14.

- The Indian home loan market is characterized by low average LTVs of 65-70% and predominantly first-time home buyers. This implies significant borrower equity and results in stability in the market.

- The expected growth in the home loan Industry gives opportunity for the Company to sustain current mortgage business growth.

FACTORS DRIVING MORTGAGE DEMAND

- Rising disposable incomes and increasing affordability of mortgage loans, with effective interest rate after tax benefits of only 7.02%, have led to greater demand in the mortgage market.

- Urbanization in India is expected to increase, with 40% of the population predicted to be living in urban areas by 2025. This will create a huge demand for urban housing, indicating the growth potential for mortgage market.

- Falling average age of house owners coupled with favorable demographics, as 60% of the country''s population is below the age of 30, has driven the growth in the housing and housing finance market.

DIVIDEND

In keeping with the Company''s policy of rewarding its shareholders, the Board of Directors of the Company, had, for the year 2013-14, declared four interim dividends aggregating to Rs 29/- per share on shares of face value Rs. 2/- each (Rs. 6/- per equity share on July 18, 2013, Rs. 7/ - per equity share on October 23, 2013, Rs. 7/ - per equity share on January 22, 2014 and Rs. 9/- per equity share on shares of face value Rs. 2/- each, on April 23, 2014). With this, the total dividend for FY 2013-14 is Rs. 29/- per share on face value of Rs. 2/- amounting to 1450%, total outflow of Rs. 1,129.76 Crore (inclusive of Corporate Dividend Tax).

SIGNIFICANT DEVELOPMENT DURING THE YEAR

Listing of the securities, post-merger of Indiabulls Financial Services Limited with the Company

312,511,167 Equity Shares and 27,500,000 warrants of the Company, issued and allotted on March 25, 2013, to the holders of Equity Shares and of listed warrants in Indiabulls Financial Services Limited (IBFSL), respectively, in the ratio of 1:1 i.e. the Share Exchange Ratio, fixed under the Scheme of Arrangement involving merger of IBFSL, with the Company in terms of the provisions of Section 391 to 394 of the Indian Companies Act, 1956 (the "Scheme"), got listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) w.e.f. July 23, 2013.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year under review.

SUBSIDIARIES

The statement pursuant to Section 212(1) (e) of the Companies Act, 1956 relating to subsidiary companies forms a part of the financial statements.

In terms of the circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs for granting general permission for not attaching certain prescribed documents including annual accounts of the Subsidiaries to the Balance Sheet of the Holding Company, as required to be attached in terms of Section 212 of the Companies Act, 1956, and accordingly as approved by the Board of Directors in its meeting held on April 23, 2014, copies of the Balance Sheet, Profit and Loss Account, Reports of the Board of Directors and Auditors of the subsidiaries of the Company as of March 31, 2014 have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same.

The annual accounts of the subsidiary companies are also kept for inspection by any shareholders in the head office of the holding company and of the subsidiary companies concerned. Further, in terms of the said circular, information required to be disclosed in respect of each of the subsidiary company, has been disclosed, in the notes to accounts of the Consolidated Balance Sheet forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 as notified by the Companies (Accounting Standard) Rules 2006, as amended from time to time, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries.

DIRECTORS

The Board in recognition of the efforts and contributions of Mr. Gagan Banga, CEO & MD of the Company in taking the company to remarkable growth and progress under his stewardship, was pleased to elevate him to the position of Vice Chairman and Managing Director of the Company.

In accordance with the provisions of Section 152 of the Companies Act, 2013 Mr. Gagan Banga (DIN: 00010894), as Vice Chairman and Managing Director and Mr. Ajit Kumar Mittal (DIN: 02698115), Executive Director of the company, retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer themselves for reappointment. The Board of Directors recommend their re-appointment.

The Board of Directors of the Company (the Board) has proposed the appointment of Dr. Kamalesh Shailesh Chandra Chakrabarty (DIN 03543682) and Mr. Rajender Mohan Malla (DIN 00136657), as Independent Directors of the Company, for a period of 5 (five) years, effective from the date of their appointment, as such by the Board. Keeping in view their vast experience & knowledge, the Board is of the view that it will be in the interest of the Company that both of them are appointed as Independent Directors on its Board. Upon the approval of the shareholders to their appointment, as Independent Directors, the appointment of Dr. Chakrabarty & Mr. Malla, as such, shall be formalized by the Board by issuing letters of appointment to them.

Brief resume of the Directors proposed to be appointed/ reappointed, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/chairmanships 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.

CORPORATE SOCIAL RESPONSIBILITY

During the year, your directors have constituted the Corporate Social Responsibility Committee comprising Mr. Joginder Singh Kataria as the Chairman and Mr. Gagan Banga and Mr. Ashwini Omprakash Kumar as other members.

The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities.

INDIABULLS FOUNDATION

The objective of Indiabulls Foundation is to do meaningful work with measureable output and maximum impact on the society. One of the first initiatives of Indiabulls Foundation is to support the development of rural districts. The Foundation has initiated pilot projects such as Aatm Shakti and Anganwadi in Rajasthan and Maharashtra with an open and a collaborative approach, which leverages the efforts of local stakeholders for a robust and scalable structure.

Other projects initiated by the Foundation are granting of mobile medical vans, rainwater harvesting, groundwater management, tree plantation, IT projects for rural development, income generation support for rural women, skills training for rural youth, conducting eye camps for rural school children and in trying to be of support to traditional artisans.

LISTING WITH STOCK EXCHANGES The Equity Shares and Warrants of the Company, issued by it pursuant to and in terms of the Scheme, got listed on BSE and NSE, on July 23, 2013 and continue to remain listed thereafter. The listing fees payable to both the exchanges for the financial year 2014-15 have been paid. The GDRs issued in lieu of IBFSL GDRs, got listed on Luxembourg Stock Exchange on September 11, 2013 and continue to remain listed thereafter.

CHANGE IN THE CAPITAL OF THE COMPANY

Subsequent to the financial year ended March 31, 2014, the Company had allotted 285,231 equity shares of face value Rs. 2/- each (a) against conversion of equivalent number of warrants (ISIN No.: INE148I13017) and (b) exercise of stock options under various ESOP Schemes of the Company, consequent to which the paid up equity share capital of the Company increased from Rs. 668,084,886/- comprising of 334,042,443 equity shares of Rs. 2/- each to Rs. 668,655,348/- comprising of 334,327,674 equity shares of Rs. 2/- each.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management''s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE REPORT Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a detailed report on Corporate Governance is included in the Annual Report. A Practicing Company Secretary''s Certificate certifying the Company''s compliance with the requirements of Corporate Governance in relation to Clause 49 of the Listing Agreement is attached with the Corporate Governance Report.

AUDITORS AND AUDITORS'' REPORT

M/s Deloitte Haskins & Sells LLP (Firm Regn. No. 117366W / W-100018), Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from the Auditors to the effect that their reappointment, if made would be in accordance with Section 141(3)(g) of the Companies Act, 2013. The Board recommends their re-appointment.

The Notes to the Accounts referred to in the Auditors'' Report are self – explanatory and therefore do not call for any further explanation.

GREEN INITIATIVES

Electronic copies of the Annual Report 2014 and Notice of the 9th AGM are sent to all the members whose email addresses are registered with the Company / Depository Participant(s). For members who have not registered their

email addresses, physical copies of the Annual Report 2014 and Notice of the 9th AGM are sent in the permitted mode. Members requiring physical copies can send a request to the Company Secretary.

The Company is providing e-voting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2014. The instructions for e-voting are provided in the Notice.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 2013

The information required to be disclosed under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 (to the extent applicable) and the provisions of Companies Act, 2013 (to the extent applicable), with respect to conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is given in the Annexure and forms a part of this Report.

In terms of 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 the employees in receipt of remuneration equal to or in excess of the limits stipulated under the said section, are required to be set out in a statement annexed to the Directors'' Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Any member who is interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217(2AA) of the Companies Act, 1956 (to the extent applicable) and the Companies Act, 2013 (to the extent notified) your Directors confirm that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures 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 31st March, 2014 and the profit of the Company for the year ended on that date;

3. The Directors have taken proper and sufficient care for maintaining 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

4. The Directors have prepared the Annual Accounts of the Company on a ''going concern'' basis.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year. Your Directors also wish to place on record their deep sense of appreciation for the contributions made and committed services rendered by the employees of the Company at various levels, to the growth & success of the Company.

For and on behalf of the Board of Directors

Date : July 6, 2014 Sameer Gehlaut

Place: New Delhi Chairman


Mar 31, 2013

Dear Shareholders,

The Directors have pleasure in presenting the Eighth Annual Report together with the audited statement of accounts of the Company for the financial year ended March 31, 2013.

Financial Results

Post merger of Indiabulls Financial Services Limited with the Company, in terms of the Court approved Scheme of Arrangement (Scheme), the financial highlights of the Company, as a merged entity, for the financial year ended March 31, 2013, are as under -

Amount (in Rs.) Particulars Year ended Year ended March 31, 2013 March 31, 2012*

Profit before Depreciation and amortisation expense 16,133,276,744 3,463,212,503

Less: Depreciation and amortisation expense 92,110,194 10,551,594

Profit before Tax 16,041,166,550 3,452,660,909

Less: Provision for Tax 3,762,096,996 952,787,551

Profit after Tax 12,279,069,554 2,499,873,358

Add: brought forward balance 1,595,235,686 1,575,337,000

Add: Transfer from Indiabulls Financial Services Limited pursuant to Scheme of Arrangement 1,295,149,850

Amount available for appropriation 15,169,455,090 4,075,210,358

Appropriations:

Interim Dividend paid on Equity Shares (Rs. 13.50 Per Share) 4,215,019,939

Interim Dividend payable on Equity Shares (Rs. 6.50 Per Share) 2,031,322,586

Dividend for the previous year on Equity Shares issued by the Erstwhile Holding Company after the year end pursuant to ESOPs Allotment 1,291,745

Corporate Dividend Tax on:

Interim Dividend paid on Equity Shares 683,781,610

– Interim Dividend payable on Equity Shares 345,223,274

– Dividend for the previous year on Equity Shares issued by the Erstwhile Holding Company after the year end pursuant to ESOPs Allotment 209,554

Transferred to General Reserve 1,228,000,000

Transferred to Special Reserve (U/s 29C of the National

Housing Bank Act, 1987) 2,455,813,911 499,974,672

Transferred to Additional Reserve (U/s 29C of the National

Housing Bank Act, 1987) 2,000,000,000 1,980,000,000

Balance of Profit Carried Forward 2,208,792,471 1,595,235,686

*figures for the financial year ended March 31, 2012 are Pre-Scheme, hence not comparable with the figures for the financial year ended March 31, 2013

BUSINESS UPDATE & FINANCIAL AND OPERATIONAL HIGHLIGHTS

The Company, as an incorporated legal entity came into existence on May 10, 2005, under the Companies Act, 1956, having been registered on such date with the Registrar of Companies, NCT of Delhi and Haryana vide registration no. U65922DL2005PLC136029 and obtained the certificate for commencement of business on January 10, 2006, to enable it to carry on the business of housing finance, upon receipt of the license to do so from the National Housing Bank. Indiabulls Financial Services Limited (IBFSL), the erstwhile promoter of the Company, incorporated on January 10, 2000 and since March 30, 2001, had already been functioning, as a non banking finance company. The merger of IBFSL with the Company, on a going concern basis, therefore ensured a continuity of the Company''s business, since March 30, 2001.

BUSINESS UPDATE

- Return on Equity (RoE) has grown to 25.65%. The Company intends to further improve RoE by maintaining a steady business growth.

- 325% interim dividend of Rs. 6.5/- per share of face value of Rs. 2/- has been declared. With this, the total dividend for FY 2012-13 (including interim dividend of Rs. 13.5/- already paid) is Rs. 20/- per share of face value of Rs. 2/- amounting to 1000%, total outflow of Rs. 727.5 Cr (inclusive of Corporate Dividend Tax).

FINANCIAL AND OPERATIONAL HIGHLIGHTS Asset Growth

- Assets continue to grow steadily on the back of long-term, low-risk mortgage loans. The total Assets under Management stood at Rs. 34,425.6 Cr up 25.09% from Rs. 27,521.2 Cr as on March 31, 2012.

Asset Composition

- Home loans, which forms the majority of incremental disbursals, are disbursed at an average ticket size of Rs. 24 lacs; average LTV of 65% at origination, for an average term of about 13 years.

- Long-term, low-risk mortgage loans'' contribution remains steady at 72% of the total assets.

HOME LOANS: STREAMLINED LOAN FULFILMENT

- In FY 2013, the Company''s document management system''s ISO certification (ISO 9001:2008) was reaffirmed.

- The Company continues to grow its branch network and now has 200 branches spread across the country.

- The Company has a well-trained, in-house Direct Sales'' Team of over 1,800 people to promptly attend to prospective customers.

IMPROVING LIABILITY PROFILE

- In keeping with its stated strategy, the Company continues to maintain healthy levels of liquidity with cash and bank balances and current investments adding up to Rs. 7,180.91 Cr at the end of FY 12-13.

- Funds raised through bonds constituted 51% of the Company''s incremental borrowings in FY 12-13.

- The Company has further reduced its reliance on short-term money to 8% of total borrowings.

DIVERSIFIED BORROWING PROGRAMME

- Amongst its lenders, the Company now counts 94 strong relationships: 27 PSU banks, 15 Private and Foreign banks and 52 other Mutual Funds, Provident Funds, Pension Funds and Insurance Companies.

IMPROVING COST-INCOME RATIO

- The Company continues to witness improving operational efficiency, with the cost to income ratio further declining to 18%.

- Going forward the Company expects the Cost/ Income ratio to improve further.

STABLE ASSET QUALITY

- Low Gross and Net NPA levels as low-risk mortgage portfolio increases the asset base, while contributing very low incremental delinquencies.

- The total provision pool, including standard asset provisions, stood at Rs. 461.28 Cr as on March 31, 2013, compared to Rs. 329.83 Cr on March 31, 2012.

Sale of Loans

During the year, the Company, under the assignment agreement route sold individual loans to different Banks / FIs.

As at 31st March, 2013, total loans outstanding in respect of loans sold stood at Rs. 3,642.7 Cr.

The Company continues to service the loans sold under these transactions and is entitled to the residual interest on the loan sold. The residual income on the loans sold is being recognized over the life of the underlying loans and not on an upfront basis. Issues through which loans have been sold have been rated by external agencies and carry a rating indicating a high degree of safety.

Loan Book

As at March 31, 2013, the Company is having the Assets under Management (AUM) of Rs 34,425.6 Cr as against Rs 27,521.2 Cr in the previous year and the loan book stood at Rs 30,782.9 Cr as against Rs 25,346.0 Cr in the previous year.

Subordinated Debt

During the year, the Company raised Rs. 533.38 Cr through the issue of long-term Unsecured Redeemable Non – Convertible Subordinated Debentures. The Subordinated Debt was assigned a ''AA '' rating from both, CARE and Brickworks Ratings.

As at March 31, 2013, the Company''s outstanding subordinated debt and perpetual debt stood at Rs. 844.68 Cr. The debt is subordinate to present and future senior indebtedness of the Company and has been assigned the rating by CARE and Brickworks Ratings. Based on the balance term to maturity, as at March 31, 2013, Rs. 816.68 Cr of the book value of subordinated debt is considered as Tier II under the guidelines issued by the Reserve Bank of India (RBI) and National Housing Bank (NHB) for the purpose of capital adequacy computation.

Non Convertible Debentures (NCD)

During the year, the Company issued NCD amounting to Rs. 3,552.1 Cr on a private placement basis. The Company''s NCD issue have been listed on the Wholesale Debt Market segment of the NSE and have been assigned a AA rating from both CARE and Brickwork Ratings. As at March 31, 2013, NCD outstanding stood at Rs. 8,561.1 Cr.

Loans from Banks during the year, the Company raised term loans amounting to Rs. 10,720.0 Cr from commercial banks. The Company further raised Rs. 200.0 crores from the banking sector as FCNR(B) loans. The Company''s long-term bank loan facilities continue to enjoy a rating of AA , signifying high degree of safety for timely servicing of debt obligations and its short-term bank loan facilities continue to enjoy a rating of A1 signifying highest degree of safety for timely servicing of debt obligations.

Non Performing Loans

Gross non-performing loans as at March 31, 2013 amounted to Rs. 270.8 Cr. This is equivalent to 0.79% of the portfolio. The Company has been successful in maintaining stable, low levels of NPA.

Regulatory Guidelines / Amendments

The Company has complied with directions from the RBI and the NHB regarding Accounting Standards, Prudential norms for asset classification, income recognition, provisioning, capital adequacy and credit rating.

Risk Management Framework

The Company has risk management framework, which provides for the mechanism for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises of members of its senior management. The RMC reviewed various risks associated with the business of the Company, its root causes, efficacy of the measures taken to mitigate the same. The RMC had met frequently during the year under review. The Company also has a robust mechanism to ensure an ongoing review of systems, policies, processes and procedures to adopt changes.

Codes and Standards

The Fair Practices Code (FPC) recommended by National Housing Bank (NHB) as well as RBI seeks to promote good and fair practices by setting minimum standards in dealing with customers while doing lending business. NHB during the year issued the revised guidelines on few codes like pre-payment policy, uniform rate of interest applicable to similar risk profiles of customer etc. The Board reviewed and approved the suitable amendments in existing FPC and put in place a mechanism to monitor and review adherence to the modified FPC.

Marketing and Distribution

Focused marketing activities were conducted covering both Above the Line (ATL) & Below the line (BTL) campaigns such as Print Ad''s. Hoardings, FM Jingles, TV Ad''s (ATL) & Below the line activities covering festive specific campaign at regional level, hosting of service desk at corporate / builder''s end etc.

Indiabulls Housing Finance Limited (IBHFL) for the first time hosted a Property Exhibition under the brand of Indiabulls Home Loans, called "Awas 2012 – A Budget Home Show" with the theme "25 lakh Mein Ghar – A dream home". The event had participation from 24 reputed developers from across Mumbai and Navi Mumbai. This was well appreciated by many of the home buyers as it gave them a good platform to find their dream home at an affordable price.

Cross Selling and Distribution of Financial Products and Services

State of the art Customer Care set up helps speedy resolution of customer queries and takes care of any further loan requirements. Survey calling has also been helping in continuous process improvement & creating customer leads. In the last financial year more than 20 offices were opened which has increased our presence to 200 branches spread across more than 20 states. All our offices are located in localities where our target customer segments are present.

Training and Human Resource Management

We have hired 130 Chartered Accountants & Management graduates in last year from esteemed colleges located across India. This talent pool is creating a platform for delivering better & skilled services to our customers. Trainings for more than 1900 employees were conducted in the last financial year covering various aspects such as Sales excellence, Customer Service, Team Building, Credit Risk, System and process, Train the Trainer, etc. We have a state of art facility spread over 25,000 sq.ft. at our corporate office at Parel, Mumbai, wherein periodic trainings sessions have been organized by the Training Department.

INDIAN MORTGAGE MARKET Mortgages % of GDP

- Lower mortgage penetration compared to Asian peers implies huge opportunity for growth.

- Mortgage/GDP ratio is expected to improve to 12% by FY15.

HOME LOAN PORTFOLIO GROWTH

- Home loan industry to grow at 15.0% CAGR from FY13 to FY16 on a large base of more than Rs. 711,000 Cr.

- Indian Home Loans'' market is characterized by low Average LTVs of 65-70% and predominantly first-time home buyers, implying significant borrower equity and self-use.

- The expected growth in the home loan Industry gives opportunity for the Company to sustain current mortgage business growth.

FACTORS DRIVING MORTGAGE DEMAND

- Tax incentives have lowered the effective interest rates of mortgages for a home loan especially for sub-25 lakh category.

- Increase in the disposable income in tandem with the property prices have kept the affordability at a moderate 5 times the annual income.

- Increasing urbanization and demographic evolutions will result in 40% of Indian population residing in cities by 2025, up from current rate of 31% as per industry reports.

- Urban housing shortage is expected to size to 31.9 million units by 2016 as per industry reports.

DIVIDEND

In keeping with the policy to reward its shareholders, the Board of Directors of the erstwhile Indiabulls Financial Services Limited (IBFSL), prior to its amalgamation with the Company, had, for the year 2012-13, declared two interim dividends aggregating to Rs 13.50 per share on shares of face value Rs. 2/- each (Rs. 8/- per equity share on October 22, 2012 and Rs. 5.50/- per equity share on January 22, 2013). Post amalgamation of IBFSL with the Company, the Board of Directors of the Company had, for the year 2012-13,declared the third interim dividend of Rs 6.50/- per equity share on shares of face value Rs. 2/- each, on April 23, 2013. Your Directors recommend that the payment of the aforesaid interim dividends aggregating to Rs. 20/- per equity share on shares of face value Rs. 2/- each for the year ended on March 31, 2013 be confirmed.

SIGNIFICANT DEVELOPMENT DURING THE YEAR Merger of Indiabulls Financial Services Limited with the Company

The Board at its meeting held on April 27, 2012 had approved the Scheme of Arrangement involving merger of Indiabulls Financial Services Limited (IBFSL, the Holding Company) with the Company in terms of the provisions of Section 391 to 394 of the Indian Companies Act, 1956 (the "Scheme"). The appointed date of the proposed merger fixed under the Scheme was April 1, 2012.

The Hon''ble High Court of Delhi, vide its Order dated December 12, 2012, received by the Company on February 8, 2013, approved the Scheme (Order). In terms of the Court approved Scheme, with the filing of the copy of the Order, on March 8, 2013 with the office of ROC, NCT of Delhi & Haryana (the Effective Date), the Scheme came into effect and IBFSL, as a going concern, stands amalgamated with IBHFL with effect from the Appointed Date, being April 1, 2012. Subsequently IBFSL shares & listed warrants got delisted from BSE and NSE w.e.f. March 19, 2013 and the Board of Directors of the Company, on March 25, 2013, issued and allotted 312,511,167 Equity Shares and 27,500,000 warrants of the Company to the holders of Equity Shares and of listed warrants in IBFSL, respectively and 20,700,000 warrants to the holders of unlisted warrants in IBFSL, in the ratio of 1:1 i.e. the Share Exchange Ratio, fixed under the Scheme. The Company is in the process of getting its shares & warrants (issued in lieu of listed equity and warrants of IBFSL) listed with NSE & BSE, for which the necessary applications have been filed with the Exchanges.

EMPLOYEES STOCK OPTIONS

In compliance with the terms of the Scheme of Arrangement, which came into effect on March 8, 2013, the Company had adopted three Employee Stock Option Schemes of erstwhile IBFSL for the benefit of IBFSL option holders, who were granted options under the ESOP Schemes of IBFSL.

The Company had also launched ESOP Scheme titled as "IHFL ESOS -2013" covering therein 39,000,000 stock options. However, no option has yet been granted under the said scheme.

The disclosures required to be made in the Directors'' Report in respect of the stock options covered under various employee stock option schemes i.e. (i) IHFL- IBFSL Employees Stock Option Plan -2006 (ii) IHFL- IBFSL Employees Stock Option Plan II-2006 and (iii) IHFL-IBFSL Employees Stock Option Plan – 2008 in force in the Company, in terms of SEBI (Employee Stock Option Scheme and Stock Purchase Scheme) Guidelines, 1999, are set out in the Annexure forming a part of this report.

PUBLIC DEPOSITS

The Company has not accepted any deposits from the public during the year under review.

SUBSIDIARIES

The statement pursuant to Section 212(1) (e) of the Companies Act, 1956 relating to subsidiary companies forms a part of the financial statements.

In terms of the circular no.2/2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs for granting general permission for not attaching certain prescribed documents including annual accounts of the Subsidiaries to the Balance Sheet of the Holding Company, as required to be attached in terms of Section 212 of the Companies Act, 1956, and

accordingly as approved by the Board of Directors in its meeting held on April 23, 2013, copies of the Balance Sheet, Statement of Profit and Loss, Reports of the Board of Directors and Auditors of the subsidiaries of the Company as of March 31, 2013 have not been attached with the Balance Sheet of the Company. These documents will be made available upon request by any Member of the Company interested in obtaining the same. The annual accounts of the subsidiary companies are also kept for inspection by any shareholders at the head office of the holding company and of the subsidiary companies concerned. Further, in terms of the said circular, information required to be disclosed in respect of each of the subsidiary company, has been disclosed, in the notes to accounts of the Consolidated Balance Sheet forming part of the Annual Report. Further, pursuant to Accounting Standard AS-21 as notified by the Companies (Accounting Standard) Rules 2006, as amended from time to time, Consolidated Financial Statements presented by the Company includes financial information of its subsidiaries.

DIRECTORS

Upon the Scheme of Arrangement coming into effect, the Board was reconstituted on March 19, 2013 and Mr. Sameer Gehlaut (DIN: 00060783), Mr. Rajiv Rattan (DIN: 00010849), Mr. Saurabh Kumar Mittal (DIN: 01175382), Mr. Shamsher Singh Ahlawat (DIN: 00017480), Mr. Ram Kumar Sheokand (DIN: 00183200), Mr. Aishwarya Katoch (DIN: 00557488), Mr. Prem Prakash Mirdha (DIN: 01352748) and Mr.Joginder Singh Kataria (DIN: 05202673) were appointed as Additional Directors on the Board of the Company and they hold office upto the date of the ensuing Annual General Meeting. In terms of the provisions of Section 257 of the Companies Act, 1956, members have proposed the candidatures of Mr. Gehlaut, Mr. Rattan, Mr. Mittal, Mr. Ahlawat, Mr. Sheokand, Mr. Katoch, Mr. Mirdha and Mr. Kataria for appointment as Directors of the Company.

Mr. Sachin Chaudhary (DIN: 02016992) and Mr. Ram Kumar (DIN: 00643837), resigned from the Directorship of the Company on March 19, 2013. Your

Directors place on record their appreciation for the services rendered by them during their tenure as directors on the Board of the Company.

In accordance with the provisions of Section 255 and 256 of the Companies Act, 1956 and the Article 129 of the Articles of Association of the Company, Mr. Ajit Kumar Mittal, (DIN: 02698115) and Mr. Ashwini Omprakash Kumar, (DIN: 03341114) retire by rotation at the ensuing Annual General Meeting of the Company and being eligible offer themselves for re-appointment. Mr. Sameer Gehlaut, Mr. Rajiv Rattan and Mr. Saurabh Kumar Mittal are being appointed as Directors, not liable to retire by rotation.

Brief resume of the Directors sought to be reappointed / appointed, nature of their expertise in specific functional areas and names of companies in which they hold directorships and memberships/ chairmanships 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.

LISTING WITH STOCK EXCHANGES

The Company is in the process of getting, its equity shares & warrants, issued by it pursuant to and in terms of the Scheme, to the holders of equity shares and listed warrants, listed with NSE & BSE. The necessary applications in the matter have been filed with the Exchanges. The GDRs to be issued in lieu of IBFSL GDRs, shall be listed on Luxembourg Stock Exchange. The listing fees payable to BSE has been paid for the financial year 2013-2014 and listing fees of NSE shall be paid at the time of listing of its shares.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management''s Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

CORPORATE GOVERNANCE REPORT

Since the Equity Shares of the Company are not yet listed on the Exchanges, there is no requirement of including Corporate Governance Report pursuant to clause 49 of the Listing Agreement, in the Annual Report. However, the Board of Directors has decided to include a detailed report on Corporate Governance in the Annual Report, in view of the Company''s imminent listing.

AUDITORS & AUDITORS'' REPORT

M/s Deloitte Haskins & Sells, Chartered Accountants (Regn. No. 117366W), Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible offer themselves for reappointment. The Company has received a certificate from the Auditors to the effect that their reappointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956. The Board recommends their re-appointment.

The Notes to the Accounts referred to in the Auditors'' Report are self – explanatory and therefore do not call for any further explanation.

INFORMATION PURSUANT TO SECTION 217 OF THE COMPANIES ACT, 1956

The information required to be disclosed under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 with respect to conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is given in the Annexure and forms a part of this Report.

In terms of 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 the employees in receipt of remuneration equal to or in excess of the limits stipulated under the said section, are required to be set out in a statement annexed to the Directors'' Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Any member who is interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

As required under Section 217 (2AA) of the Companies Act, 1956 your Directors confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures 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 31st March, 2013 and the profit of the Company for the year ended on that date;

3. the Directors have taken proper and sufficient care for maintaining 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

4. the Directors have prepared the Annual Accounts of the Company on a ''going concern'' basis.

ACKNOWLEDGEMENT

Your Directors wish to express their gratitude for the continuous assistance and support received from the investors, clients, bankers, regulatory and government authorities, during the year. Your Directors also wish to place on record their deep sense of appreciation for the contributions made and committed services rendered by the employees of the Company at various levels, to the growth & success of the Company.

For and on behalf of the Board of Directors

Date: June 5, 2013 Sameer Gehlaut

Place: New Delhi Chairman

 
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