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Directors Report of GRUH Finance Ltd.

Mar 31, 2019

TO THE MEMBERS,

The directors are pleased to present the 33rd Annual Report of your Company with the audited accounts for the year ended March 31, 2019.

Financial Results - Based on Ind AS Financial Statements

(Rs. in crore)

	For the year ended March 31, 2019	For the year ended March 31, 2018
Profit Before Tax	615.04	567.15
Provision for Tax (Net of Deferred Tax)	167.84	164.40
Profit After Tax	447.20	402.75
Add:
Balance brought forward from last year	540.64	447.33
Amount available
for appropriation	987.84	850.08
Appropriations:
Statutory Reserve u/s 29C of NHB Act & u/s 36(1)(viii) of I.T. Act	105.00	106.25
General Reserve	85.00	80.00
Dividend including tax thereon pertaining to previous year paid during the year	145.50	123.00
Remeasurement of Defined Benefit Plans 0.53		0.19
Balance carried to Balance Sheet	651.81	540.64
	987.84	850.08

Merger of the Company with Bandhan Bank Limited

The board of directors of the Company, at its meeting held on January 7, 2019, approved the Composite Scheme of Arrangement (âSchemeâ) for the merger of the Company with and into Bandhan Bank Limited under Sections 230-232 of the Companies Act, 2013, subject to receipt of applicable approvals.

The proposed amalgamation has been approved by the Competition Commission of India on April 15, 2019. No objection has been issued by the National Housing Bank (NHB) on March 4, 2019, the National Stock Exchange of India Limited on April 3, 2019 and the BSE Limited on April 3, 2019, respectively. Housing Development Finance Corporation Limited and Bandhan Bank Limited have also received approval from the Reserve Bank of India.

The Scheme remains subject to approvals from the National Company Law Tribunal (NCLT), the respective shareholders and creditors of the Company as applicable and other applicable statutory and regulatory approvals. Similar approvals are also pending in respect of Bandhan Bank.

Indian Accounting Standards (Ind As)

The Ministry of Corporate Affairs (MCA), based on its notification in the Official Gazette vide Notification G.S.R. 111(E) and G.S.R. 365(E) dated February 16, 2015 and March 30, 2016 respectively, notified the Indian Accounting Standards (Ind AS) applicable to certain class of companies. Ind AS has replaced the Indian GAAP prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These notifications are applicable to all Housing Finance Companies (HFCs) effective April 1, 2018.

Accordingly, your Company has adopted Ind AS as prescribed under Section 133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment /rules made thereafter from April 1, 2018. The effective date of such transition is April 1, 2017. Such transition has been carried out from the erstwhile Accounting Standards notified under the Act, read with relevant rules issued thereunder and guidelines issued by NHB (Collectively referred to as âthe Previous GAAPâ).

The impact of transition has been recorded in the opening reserves as at April 1, 2017. The corresponding figures presented in these financial statements have been prepared on the basis of the previously published financial statements under the previous GAAP duly re-stated to Ind AS. These Ind AS adjustments have been audited by the statutory auditors. The financial statements have been prepared based on the notified Schedule III for Non-Banking Financial Companies issued by the Ministry of Corporate Affairs on October 11, 2018. The reconciliation and descriptions of the effect of the transition from IGAAP to Ind AS have been provided in note 4 in the note to accounts in the financial statements.

Dividend

Your directors recommend payment of dividend of Rs. 2.00 per equity share of face value of Rs. 2 each for the year ended March 31, 2019 on the enhanced paid-up capital of the Company post the issue of bonus shares in the ratio of 1:1. Considering that the Company declared a 1:1 bonus during the year, the effective dividend for the year is Rs. 4.00 per equity share (pre-bonus) as compared to a dividend of Rs. 3.30 per equity share in the previous year. Although the bonus shares were allotted on June 8, 2018, dividend on these shares will be payable for the entire year. The dividend payout ratio for the year inclusive of additional tax on dividend will be 40%. The dividend recommended is in accordance with the principles and criteria as set out in the Dividend Distribution Policy which has been approved by the board of directors. The policy is provided as âAnnexure Aâ to this Report.

Changes in Share Capital

During the year, the authorised share capital was increased from Rs. 100 crore divided into 50 crore equity shares of face value of Rs. 2 each to Rs. 200 crore divided into 100 crore equity shares of face value ofRs. 2 each.

During the year, the paid up equity share capital increased as a result of the 1:1 Bonus issue, whereby your Company allotted 36,57,20,011 bonus shares. The paid-up share capital also increased as a result of allotment of 22,47,490 equity shares of face value of Rs. 2 each upon exercise of stock options under ESOS-2015. As at March 31, 2019, the equity share capital stood at Rs. 146,73,75,024 divided into 73,36,87,512 equity shares of Rs. 2 each.

Disbursements

Loan disbursements during the year were Rs. 4,936 crore. GRUH continued to focus mainly on the retail segment and disbursed Rs. 4,213 crore to 42,994 loans. Cumulative disbursements as at March 31, 2019 were Rs. 33,392 crore.

Rural Housing

During the year, GRUH disbursed Rs. 1,578 crore in respect of 15,546 loans in the rural areas. Cumulative disbursements under the rural housing has been Rs. 13,470 crore in respect of 2,26,921 loans.

Affordable Housing

GRUH has signed the MOU with the Government of India for the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana for Economically weaker Section (EWS), Lower Income Group (LIG) and Middle Income Group (MIG) segments. GRUH has been an active contributor to the scheme and has sanctioned Rs. 1,944 crore during the year in respect of 18,736 loans wherein the customers were eligible for CLSS. During the year, GRUH submitted claims aggregating to a subsidy of Rs. 391 crore in respect of 16,090 loans aggregating to loan amount of Rs. 1,557 crore. GRUH received and credited claims of Rs. 464 crore in respect of 18,990 loan accounts aggregating to loan amount of Rs. 1,763 crore. The subsidy received is credited to the respective customerâs loan account and the instalment amount is reduced, keeping the balance tenure constant. Claims in respect of 4,452 loans are awaiting sanction from NHB / credit to individual customersâ loan accounts in respect of loan amount of Rs. 454 crore.

Since inception of the scheme, GRUH has sanctioned 53,490 loans wherein customers are eligible for CLSS subsidy in respect of loan amount of Rs. 5,140 crore. GRUH has received claim of Rs. 727 crore in respect of 31,349 loans.

The majority of the claims submitted are in respect of the EWS and LIG customers.

Loan Assets

As at March 31, 2019, the loan assets increased to Rs. 17,408 crore recording a growth of 11.68%. Loan assets in respect of the retail home loans grew by 11.28% and stood at Rs. 16,188 crore.

Impairment of Financial Instruments under Ind AS

Under Ind AS, asset classification and provisioning moves from the ârule basedâ, incurred losses model to the Expected Credit Loss (ECL) model of providing for expected future credit losses. Thus, loan loss provisions are made on the basis of the Companyâs historical loss experience and future expected credit loss, after factoring in various macro-economic parameters. Under Ind AS, asset classification comprises three categories based on ageing of Exposure at Default (EAD) which is principal and accrued interest. Outstanding between 0 to 30 days are Stage 1 assets, outstanding between 31 days to 89 days are Stage 2 assets and Stage 3 assets are those assets where outstanding EAD is for 90 days and above.

Accordingly, as per Ind AS, GRUHâs Stage 1 Loan Assets have improved from 94.48% as at March 31, 2018 to 95.58% as at March 31, 2019. Stage 2 loans have improved from 5.07% as at March 31, 2018 to 3.76% as at March 31, 2019. Loans under Stage 3 have increased from 0.45% as at March 31, 2018 to 0.66% as at March 31, 2019.

As per Ind AS 109 on Financial Instruments, GRUH is required to carry total provisions of Rs. 45.16 crore towards expected future credit losses which is 0.26% on Loan Assets of Rs. 17,408 crore. Of this, provision of Rs. 9.28 crore is required towards Stage 3 loans of Rs. 114 crore. Provisions amounting to Rs. 35.88 crore is required on Stage 1 and Stage 2 loan assets of Rs. 17,294 crore. However, as a measure of prudence, your directors have decided to carry a total provision of Rs. 119.58 crore towards future expected credit losses under Ind AS.

During the year, GRUH has written off Rs. 0.86 crore in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs. 0.46 crore during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

Standard Assets, NPAs and Provisions under NHB norms as per IGAAP

As per the prudential norms prescribed by NHB for Standard Loan Assets, HFCs are required to carry a provision of 0.25% on Individual Home Loans, 1% on Individual NRP Loans, 0.75% on developer loans for residential projects and 1% on developer loans for commercial projects.

Accordingly, GRUH is required to carry total provision of Rs. 51.48 crore on Standard Loan Assets comprising Individual Home Loans, Individual NRP Loans and Developer Loans, aggregating to Rs. 17,263 crore. This provision includes provision of Rs. 0.14 crore towards Standard Assets in respect of instalments due from borrowers of Rs. 44.02 crore and a provision of Rs. 0.02 crore in respect of Standard Assets on Loan against GRUHâs fixed deposits and interest accrued thereon of Rs. 2.12 crore.

NHB, vide its notification dated August 2, 2017, reduced the provisioning requirement on Standard Individual Home Loans from 0.40% to 0.25%. However, as per the said notification, excess provision on account of reduction in provisioning requirement is to be carried forward. GRUH carries a provision of Rs. 16.26 crore on account of such reduction.

Therefore, against a provisioning requirement of Rs. 51.48 crore on total Standard Assets, GRUH carries a provision of Rs. 67.74 crore.

As per the prudential norms of NHB, GRUH has identified NonPerforming Assets (NPAs) and made required provisions on such NPAs besides not recognising income in respect of such NPAs. An asset is NPA if the interest or principal instalment is overdue for 90 days.

GRUHâs NPAs as at March 31, 2019 were Rs. 101.97 crore in respectof Individual Home loans and Rs. 12.47 crore in respect ofIndividual NRP loans. There were no NPAs under developer loans. GRUH is required to carry a provision of Rs. 30.87 crore towards non-performing loans as per NHB norms. Accordingly, under NHB norms, GRUH is required to carry total provision of Rs. 98.61 crore towards NPAs and Standard Assets. Net Non-Performing Loans were 0.35% on outstanding loans of Rs. 17,377 crore.

Borrowings

NHB Refinance

GRUH received refinance sanction of Rs. 2,000 crore from NHB and the same was availed during the year. The refinance outstanding as at March 31, 2019 was Rs. 3,706 crore.

Bank Term Loans

GRUH received fresh sanctions from banks amounting to Rs. 2,850 crore and the same was availed during the year. The outstanding bank term loans as at March 31, 2019 were Rs. 6,775 crore.

Subordinated Debt and Non-Convertible Debentures (NCDs)

As at March 31, 2019, GRUHâs outstanding subordinated debt stood atRs. 35 crore. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of âICRA AAA(*)â and âCRISIL AAA(*)â indicating highest degree of safety regarding timely payment of financial obligations. Based on the balance term to maturity, as at March 31, 2019, Rs. 21 crore of the face value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

(*)Indicates âon watch with negative implicationsâ post merger announcement on January 7, 2019.

During the year, GRUH raised NCDs amounting to Rs. 1,230 crore on a private placement basis. The outstanding NCDs as at March 31, 2019 stood at Rs. 4,305 crore. NCDs are rated âICRA AAA(*)â and âCRISIL AAA(*)â indicating highest degree of safety regarding timely payment of financial obligations.

(*)Indicates âon watch with negative implicationsâ post merger announcement on January 7, 2019.

In the case of ratings of both, subordinated debt and NCDs, the rating agencies have indicated that the above ratings are placed on ârating watch with negative implicationsâ following the announcement of the merger on January 7, 2019. This is because once the merger transaction is completed, the analytical approach of the rating agencies would no longer factor the expectation of support of its majority owner, HDFC Limited.

Commercial Paper

GRUHâs commercial paper is rated âICRA A1 â and âCRISIL A1 â indicating very strong degree of safety regarding timely payment of financial obligations. As at March 31, 2019, outstanding commercial paper was Rs. 200 crore.

Deposits

GRUH mobilised deposits of Rs. 542 crore and experienced a renewal ratio of 48.30% during the year. The outstanding balance of deposits as at March 31, 2019 was Rs. 1,562 crore.

GRUHâs Deposit programme is rated âMAAA(*)â by ICRA and âFAAA(*)â by CRISIL. These ratings indicate very strong degree of safety as regards timely repayment of principal and interest.

There has been no default in repayment of deposits or payment of interest during the year. All the deposits accepted by the Company are in compliance with the requirements of NHB guidelines and Chapter-V of the Companies Act, 2013.

(*)Indicates âon watch with negative implicationsâ post merger announcement on January 7, 2019.

Investments

GRUH continues to maintain its Statutory Liquidity Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 229 crore as at March 31, 2019 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Unclaimed Deposits and Unclaimed NCDs

As at March 31, 2019, deposits and / or interest thereon amounting to Rs. 57.52 crore had not been claimed by 2,122 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of section 125 of the Companies Act, 2013, deposits, NCDs and/or interest thereon, remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India.

Accordingly, an amount of Rs. 4.54 lacs in respect of unclaimed deposits and interest thereon was transferred to the IEPF during the year.

As at March 31, 2019, there were no NCDs amount or interest thereon, which remained unclaimed and unpaid.

Unclaimed Dividends and Unclaimed Shares

As at March 31, 2019, dividend amounting to Rs. 2.08 crore had not been claimed by shareholders of the Company. The Company takes various initiatives to reduce the quantum of unclaimed dividend and has been periodically intimating the concerned shareholders, requesting them to encash their dividend before it becomes due for transfer to the IEPF.

Unclaimed dividend amounting to Rs. 15.06 lac for FY 2010-11 was transferred to the IEPF on August 28, 2018. In terms of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended, the Company transferred the corresponding shares to IEPF, where the dividends for the last seven consecutive years have not been claimed by the concerned shareholders.

The unclaimed dividend in respect of FY 2011-12 must be claimed by shareholders on or before July 17, 2019, failing which the Company will be transferring the unclaimed dividend and the corresponding shares to the IEPF within a period of 30 days from that date. The concerned shareholders, however, may claim the dividend and shares from IEPF, the procedure for which is detailed in the Shareholdersâ Information section.

In terms of the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, GRUH has made the relevant disclosures to the Ministry of Corporate Affairs (MCA) regarding unclaimed dividends and unclaimed matured deposits along with interest accrued thereon. GRUH has uploaded the prescribed information on www.iepf.gov.in and www.gruh.com.

Risk Management Framework

Regulation 21 of SEBI (LODR) Regulations, 2015 has, effective April 1, 2019, mandated for the top 500 listed entities determined on the basis of market capitalisation as at the end of the immediate previous financial year, that they shall constitute a Risk Management Committee (RMC) of Directors. However, your boards of directors have constituted Risk Management Committee of Directors effective from October 29, 2018. Prior to that, the board had delegated responsibility of overseeing risk management framework including asset liability management to the Audit Committee.

GRUH has a Risk Management framework approved by the board of directors. GRUHâs Risk Management framework provides the mechanism for risk assessment and mitigation. GRUH also has an Asset Liability Management (ALM) policy approved by the board.

During the year, the RMC reviewed the risks associated with the business of GRUH, its root causes and the efficacy of the measures taken to mitigate the same. RMC also reviewed the risk arising from the gaps in the liquidity and interest rate sensitivity statements and took decisions in mitigating the risk by ensuring adequate liquidity through maturity profile of assets and liabilities. The observations of the Risk Management Committee of directors if any, on the key risks associated with the business and ALM were reported to the board.

The board of directors also reviewed the key risks associated with the business and ALM of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

Regulatory Guidelines

GRUH continues to comply with the guidelines issued by NHB regarding accounting guidelines, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, Know Your Customer (KYC) guidelines and Anti Money Laundering (AML) standards, fair practices code and real estate and capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

GRUHâs Capital Adequacy Ratio stood at 20.30% as against the minimum requirement of 12%. Tier - I capital was 19.26% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH is registered with CERSAI and has been submitting data in respect of its loans.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, in-house training programmes were provided to employees, inter alia in lending operations, recoveries, KYC, IT system & security and accounts. Employees were also nominated for training programmes conducted by NHB and other institutions. 46 employees underwent different training programmes.

GRUHâs staff strength as at March 31, 2019 was 677.

Particulars of Employees

GRUH had 2 employees as at March 31, 2019 employed throughout the year who were in receipt of remuneration of Rs. 1.02 crore or more per annum or Rs. 8.50 lacs or more per month if employed for part of the year.

In accordance with the provisions of section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, the name and other particulars of such employees are set out in the annex to the Directorsâ Report. However, as per the provisions of section 136 of the Companies Act, 2013, the Directorsâ Report is being sent to all shareholders of the Company excluding the annex. The annex is available for inspection by the members at the registered office of the Company during business hours on working days up to the date of ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Employees Stock Option Scheme

The stock options granted to the eligible employees operate under the scheme ESOS-2015. There has been no material variations in the terms of the options granted under the scheme and the scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The disclosures as required under Regulation 14 of the said regulations have been placed on the website of the Company.

The Board of Directors at its meeting held on March 14, 2019, upon the recommendation of the Nomination and Remuneration Committee of Directors of the Company, approved the issue of additional 90,00,000 equity shares of Rs. 2 each of the Company to eligible employees under existing Employee Stock Option Scheme 2015, in terms of SEBI (Share Based Employee Benefits) Regulations, 2014 and amendment of the Employee Stock Option Scheme 2015 by increasing the number of stock options to be granted to eligible employees. Subsequently, members of the Company with requisite majority have, on April 22, 2019, passed the said special resolution through postal ballot.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder, the Company has implemented a policy on Prevention of Sexual Harassment of Women at Workplace. An Internal Complaints Committee has been set up to receive complaints, investigate the matter and report to the management.

At the begining of the year, there was no complaint pending. During the year, no complaint was received by the Committee and hence no complaint was pending at year end.

Auditors

Statutory Auditors

At the 31st Annual General Meeting (AGM) held on June 15, 2017, the members had appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as Statutory Auditors for a term of five years beginning from the conclusion of the 31st AGM till the conclusion of the 36th AGM, subject to them ratifying the said appointment at every AGM.

The Company has received confirmation from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, to the effect that their appointment would be in terms of sections 139 and 141 of the Companies Act, 2013 and rules made thereunder.

In terms of the provisions relating to statutory auditors forming part of the Companies Amendment Act, 2017, notified on May 7, 2018, ratification of appointment of Statutory Auditors at every AGM is no more a legal requirement. Accordingly, the notice convening the ensuing AGM does not carry any resolution on ratification of the appointment of the Statutory Auditors.

The Statutory Auditors have audited the books of accounts of the Company for the financial year ended March 31, 2019 and have issued the Auditorsâ Report thereon. The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Secretarial Audit

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, GRUH has appointed Mr. M. C. Gupta of M/s M. C. Gupta & Co., a firm of Company Secretary in practice to undertake the Secretarial Audit of the company. The Report of the Secretarial Audit is annexed herewith as âAnnexure Bâ to this report.

The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Directors and Key Managerial Personnel

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Keki M. Mistry, director of the Company, is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment.

Necessary resolutions for the re-appointment of the aforesaid director and the detailed profile has been included in the notice convening the ensuing AGM and details of the proposal for re-appointment is mentioned in the explanatory statement of the notice.

Ms. Renu S. Karnad, Non-executive director of the Company, resigned from the Board w.e.f. March 8, 2019 due to personal reasons and other commitments.

Mr. Prafull Anubhai, Independent Director of the Company, completed his 2nd term on March 31, 2019 and ceased to be a director of the Company from the close of March 31, 2019.

Your directors place on record their appreciation for the invaluable contributions made by Ms. Renu S. Karnad and Mr. Prafull Anubhai during their term as directors of the Company.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of section 164 of the Companies Act, 2013.

There was no change in the Key Managerial Personnel during the year.

Details of managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as per âAnnexure Câ to this report.

Directorsâ Responsibility Statement

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2019 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed by the Company and such internal financial controls were adequate and were operating effectively;

vi. Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

Corporate Social Responsibility Initiatives

In accordance with the provisions of section 135 of the Companies Act, 2013 and the rules framed thereunder, the Company has a Corporate Social Responsibility Committee of directors comprising

Mr. S. G. Mankad - Chairman, Mr. Pankaj Patel, Mr Keki M. Mistry and Mr. Sudhin Choksey and has inter alia also formulated a CSR Policy.

The role of the CSR Committee is to review the CSR policy, indicate activities to be undertaken by the Company towards CSR activities and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR activities.

GRUH was required to spend Rs. 9.11 crore towards CSR activities during the year. GRUH has approved CSR proposals aggregating to Rs. 10.37 crore and incurred CSR expenditure of Rs. 6.23 crore during the year. Cumulatively, GRUH has approved CSR proposals aggregating to Rs. 25.94 crore and has incurred CSR expenditure of Rs. 18.15 crore.

GRUH has approved CSR proposals in the field of providing education, promoting health care, sanitation, education for differently abled children, promoting vocational skills, empowerment of women and gender equality and protection of national heritage, art and culture.

The Annual Report on CSR Activities, which forms part of the Directorsâ Report, is annexed as âAnnexure Dâ to this report.

Business Responsibility Reporting

As required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015, Business Responsibility Report forms part of the Directorsâ Report and is annexed as âAnnexure Eâ to this report.

Extract of Annual Return [Form MGT-9]

As per the requirements of Section 92(3) and 134(3)(a) of the Act and Rules framed thereunder, the extract of the annual return for FY 20182019 is given in âAnnexure Fâ in the prescribed Form No. MGT-9, which is a part of this report. The same is available on https://www.gruh.com/ extract-annual-return/

Requirement for maintenance of cost records:

Since the Company is into housing finance, the Company is not required to maintain cost records as specified by the Central Government under section 148(1) of the Companies Act, 2013.

Particulars

Particulars of loans, guarantees or investments made :

Since the Company is a housing finance company, provisions of section 186 of the Companies Act 2013 relating to loans made, guarantees given or securities provided are not applicable to the company.

As regards investments made by the Company, the details of the same are provided under Note to Accounts forming part of the annual accounts of the Company for the year ended March 31, 2019.

Particulars of Contracts or arrangements entered into with related parties :

In accordance with the provisions of section 188 of the Companies Act, 2013 and rules made thereunder, the transactions entered into with related parties are in the ordinary course of business and on an armâs length pricing basis, the details of which are included in the notes forming part of the financial statements. There are no material related party transactions entered during the year. Accordingly, information in form AOC - 2 is not annexed. As required by NHB notification no. NHB.HFC.CG-DIR.1/MD&CE0/2016 dated February 9, 2017, a policy on Transactions with Related Parties is given as âAnnexure Gâ to this report.

All related party transactions were approved by Audit Committee, Board and reviewed by Statutory Auditors.

Material Changes, details of Subsidiaries, Litigations

There has been no material changes and commitments, affecting the financial position of the company which has occurred between the end of the financial year to which the financial statements relate and the date of the report.

The Company does not have any subsidiary. There has been no change in the nature of business of the Company.

No significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the company and / or the companyâs operations in future.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts) Rules, 2014 are not applicable. GRUH does not have any foreign exchange earnings. GRUH has paid dividend of Rs. 0.41 crore in foreign currency.

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

In accordance with the SEBI (LODR) Regulations, 2015 and NHB Directions, the Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 30, 2019 Chairman

DIN : 00008886

Mar 31, 2018

TO THE MEMBERS,

The directors are pleased to present the 32^nd Annual Report of your Company with the audited accounts for the year ended March 31, 2018.

FINANCIAL RESULTS (Rs. in crores)

	For the year ended March 31, 2018	For the year ended March 31, 2017
Profit Before Tax	562.07	442.00
Provision for Tax (Net of deferred tax)	199.39	145.35
Profit After Tax	362.68	296.65
Add:
Balance brought forward from last year	331.79	184.14
Amount available
for appropriation	694.47	480.79
Appropriations:
Statutory Reserve u/s 29C of NHB Act & u/s 36(1)(viii) of I.T. Act	106.25	84.00
General Reserve	80.00	65.00
Dividend including tax thereon pertaining to previous year paid during the year	123.00
Balance carried to Balance Sheet	385.22	331.79
	694.47	480.79

Dividend

Your directors recommend payment of dividend of Rs.3.30 per equity share of face value of Rs.2 each for the year ended March 31, 2018 as against a dividend of Rs.2.80 per share of face value of Rs.2 each for the previous year. The dividend payout ratio for the year inclusive of additional tax on dividend will be 40%. The dividend declared/ recommended is in accordance with the principles and criteria as set out in the Dividend Distribution Policy which has been approved by the board of directors. The policy is provided as âAnnexure Aâ to this Report.

Bonus Issue

Your directors recommend an issue of bonus shares in the ratio of one equity share of Rs.2 each for every one existing equity share of Rs.2 each of the Company held by the members on a date to be fixed by the board, by capitalising a part of the Securities Premium Account. The proposed issue of bonus shares is subject to the consent of shareholders at the forthcoming AGM. The bonus shares shall rank pari passu in all respects with the existing fully paid up equity shares of the Company, including any dividend that may be declared for the financial year in which the bonus shares are allotted. The dividend declared for the year ended March 31, 2018 shall not be applicable on the Bonus Shares.

Changes in Share Capital

In order to facilitate the capitalisation of the Securities Premium Account to the extent of issue of bonus shares, the authorised share capital of the Company is being increased from Rs.100 crores to Rs.200 crores by creation of 50 crores equity shares of Rs.2 each.

During the year, the paid up equity share capital increased as a result of allotment of 11,55,527 equity shares of the face value of Rs.2/each upon exercise of stock options under ESOS-2015. As at March 31, 2018, the equity share capital stood at Rs.73,14,40,022 divided into 36,57,20,011 equity shares of Rs.2/- each.

Disbursements

Loan disbursements during the year were Rs.5,259 crores as against Rs.4,125 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs.4,645 crores to 50,137 families. Cumulative disbursements as at March 31, 2018 were Rs.28,456 crores.

Rural Housing

During the year, GRUH disbursed Rs.1,994 crores in respect of 21,145 loans in the rural areas. Cumulative disbursement under the rural housing has been Rs.11,892 crores in respect of 2,11,375 loans.

Affordable Housing

GRUH has signed the MOU with the Government of India for the Credit Linked Subsidy Scheme (CLSS) under the Pradhan Mantri Awas Yojana for EWS, LIG and MIG segments. GRUH has been an active contributor to the scheme and has disbursed Rs.1,632 crores during the year in respect of 18,556 loans wherein the customers were eligible for Credit Subsidy. The growth in loans under the CLSS has been 104% in terms of loan amount and has been the major contributor for the growth in disbursements of the company.

During the year, GRUH submitted claims aggregating subsidy of Rs.335.65 crores in respect of 14,234 loans aggregating loan amount of Rs.1,304.42 crores. Of the above, GRUH received claims of Rs.196.58 crores in respect of 8,508 loan accounts aggregating loan amount of Rs.767.74 crores. The subsidy received is credited to the respective customersâ loan account by way of prepayment and the instalment amount is reduced keeping the balance tenure constant. Claims in respect of 5,726 loans are awaiting sanction from NHB in respect of Loan amount of Rs.536.68 crores.

Since inception of the scheme, GRUH has disbursed 32,783 loans wherein customers are eligible for CLSS subsidy in respect of loan amount of Rs.2,739 crores of which GRUH has received claim of Rs.319.16 crores in respect of 14,667 loans.

The majority of the claims submitted are in respect of the EWS and LIG customers.

Loan Assets

As at March 31, 2018, the loan assets increased to Rs.15,568 crores recording a growth of 17.55%. Loan assets in respect of the retail home loans grew by 17.80% and stood at Rs.14,900 crores.

Non-Performing Loans

As per the prudential norms of National Housing Bank (NHB), GRUHâs gross non-performing loans stood at Rs.70.09 crores as at March 31, 2018, constituting 0.45% of the total outstanding loans of Rs.15,568 crores. The gross non-performing loans as at March 31, 2017 were Rs.40.58 crores constituting 0.31% of the total outstanding loans of Rs.13,244 crores.

During the year, NHB vide notification No. NHB.HFC.DIR.18/MD&CEO/ 2017 dated August 2, 2017 reduced the provisioning requirement on Standard Individual Housing Loans from 0.40% to 0.25%.

GRUH carries a provision of Rs.56.35 crores on standard individual home loans of Rs.14,465 crores and a provision of Rs.9.53 crores on standard loans other than individual home loans of Rs.1,033 crores as at March 31, 2018. GRUH also carries provision of Rs.0.21 crore on Instalments Due from Borrowers of Rs.50 crores and Rs.0.01 crore on Loan Against Deposit and interest accrued thereon of Rs.1.26 crore. GRUH has made the required provisions and carries a total provision of Rs.66.10 crores in respect of standard assets. As per revised norms, as on March 31, 2018, GRUH carries Standard Assets provision which is Rs.20.25 crores higher than the revised regulatory requirement of minimum 0.25%.

GRUH is required to carry a provision of Rs.17.89 crores towards nonperforming loans as per NHB norms. However, as a measure of prudence, your directors have decided to carry provision of Rs.53.47 crores towards NPAs. GRUH also carries provision of Rs.16.63 crores as contingencies. GRUH therefore carries a total provision of Rs.136.20 crores on its total assets including standard assets and non-performing loans. Net Non-Performing Loans were Nil on outstanding loans of Rs.15,568 crores.

During the year, GRUH has written off Rs.1.08 crore in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs.0.29 crore during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

Borrowings

NHB Refinance

GRUH did not avail any refinance during the year. The refinance outstanding as at March 31, 2018 was Rs.2,048.19 crores.

Bank Term Loans

GRUH received fresh sanctions from banks amounting to Rs.1,380 crores and the same was availed during the year. The outstanding bank term loans as at March 31, 2018 were Rs.5,638 crores.

Subordinated Debt

As at March 31, 2018, GRUHâs outstanding subordinated debt stood at Rs.35 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of âICRA AAAâ and âCRISIL AAAâ indicating highest degree of safety regarding timely payment of financial obligations. Based on the balance term to maturity, as at March 31, 2018, Rs.28 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs amounting to Rs.2,060 crores on a private placement basis. The outstanding NCDs as at March 31, 2018 stood at Rs.4,097 crores. NCDs are rated âICRA AAAâ and âCRISIL AAAâ indicating highest degree of safety regarding timely payment of financial obligations.

Commercial Paper

GRUHâs commercial paper is rated âICRA A1 â and âCRISIL A1 â indicating very strong degree of safety regarding timely payment of financial obligations. As at March 31, 2018, outstanding commercial paper was Rs.770 crores.

Deposits

GRUH mobilised deposits of Rs.477 crores and experienced a renewal ratio of 50.71% during the year. The outstanding balance of deposits as at March 31, 2018 was Rs.1,458 crores.

GRUHâs Deposit programme is rated âMAAAâ by ICRA and âFAAAâ by CRISIL. These ratings indicate very strong degree of safety as regards timely repayment of principal and interest.

Investments

GRUH continues to maintain its Statutory Liquidity Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs.214.48 crores as at March 31, 2018 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Unclaimed Deposits and Unclaimed NCDs

As at March 31, 2018, deposits amounting to Rs.9.52 crores had not been claimed by 2,257 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

Accordingly, an amount of Rs.4.75 lacs in respect of unclaimed deposits and interest thereon was transferred to the IEPF during the year.

As at March 31, 2018, there was no NCDs amount or interest thereon, remaining unclaimed and unpaid.

Unclaimed Dividends and Unclaimed Shares

As at March 31, 2018, dividend amounting to Rs.1.86 crore had not been claimed by shareholders of the Company. The Company takes various initiatives to reduce the quantum of unclaimed dividend and has been periodically intimating the concerned shareholders, requesting them to encash their dividend before it becomes due for transfer to the Investor Education and Protection Fund (IEPF).

Unclaimed dividend amounting to Rs.9.52 lacs for FY 2009-10 was transferred to the IEPF on August 3, 2017. In terms of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended, the Company transferred the corresponding shares to IEPF, where the dividends for the last seven consecutive years have not been claimed by the concerned shareholders.

Further, the unclaimed dividend in respect of FY 2010-11 must be claimed by shareholders on or before August 11, 2018, failing which the Company will be transferring the unclaimed dividend and the corresponding shares to the IEPF within a period of 30 days from the said date. The concerned shareholders, however, may claim the dividend and shares from IEPF, the procedure for which is detailed in the Shareholdersâ Information section.

Risk Management Framework

GRUH has a Risk Management framework approved by the board of directors. GRUHâs Risk Management framework provides the mechanism for risk assessment and mitigation. The board has delegated responsibility of overseeing Risk Management framework to the Audit Committee. The Risk Management Committee (RMC) of GRUH comprises the Managing Director and members of Senior Management.

During the year, the RMC reviewed the risks associated with the business of GRUH, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the board of directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

GRUH has an Asset Liability Management (ALM) policy approved by the board. The task of overseeing the ALM has been entrusted to the Audit Committee which overseas and reviews the ALM position every quarter. The ALM Committee (ALCO) comprises of the Managing Director and members of Senior Management.

During the year, the ALCO reviewed the risk arising from the gaps in the liquidity and interest rate sensitivity statements and took decisions in mitigating the risk by ensuring adequate liquidity and profitability through maturity profile of assets and liabilities.

The observations of the Audit Committee if any, on the ALM are reported to the board.

Regulatory Guidelines

GRUH continues to comply with the guidelines issued by NHB regarding accounting guidelines, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, Know Your Customer(KYC) guidelines and Anti Money Laundering (AML) standards, fair practices code and real estate and capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

GRUHâs Capital Adequacy Ratio stood at 18.90% as against the minimum requirement of 12%. Tier - I capital was 17.68% against the minimum requirement of 6%.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, in-house training programmes were provided to employees, inter alia in lending operations, recoveries, KYC, IT system & security and accounts. Employees were also nominated for training programmes conducted by NHB and other institutions. 36 employees underwent different training programmes.

GRUHâs staff strength as at March 31, 2018 was 692.

Particulars of Employees

GRUH had 2 employees as at March 31, 2018 employed throughout the year who were in receipt of remuneration of Rs.1.02 crores or more per annum or more per annum or Rs.8.50 lacs or more per month if employed for part of the year.

Employees Stock Option Scheme

The stock options granted to directors and employees operate under the scheme ESOS-2015. There has been no material variations in the terms of the options granted under the scheme and the scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The disclosures as required under Regulation 14 of the said regulations have been placed on the website of the Company.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace

During the year, no complaint was received by the committee.

Awards and Recognitions

During the year, GRUH was the recipient of the following awards:

- Best Performing Primary Lending Institution under CLSS for EWS and LIG segment and Award for Maximum number of loans to EWS segment under CLSS for EWS and LIG. from the Ministry of Housing and Urban Poverty Alleviation, Government of India.

- Best Performing Primary Lending Institution under the CLSS scheme in the EWS and LIG category from the National Housing Bank at a conference sponsored by My Liveable City.

- Winner in the Affordable Housing Finance Category at the Outlook Money Awards 2017.

Auditors

Statutory Auditors

At the 31^st Annual General Meeting held on June 15, 2017, the members had appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as Statutory Auditors for a term of five years beginning from the conclusion of the 31^st AGM till the conclusion of the 36^th AGM, subject to them ratifying the said appointment at every AGM.

The company has received a confirmation from M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, to the effect that their appointment, if made, at the ensuing AGM would be in terms of Sections 139 and 141 of the Companies Act, 2013 and rules made thereunder. The board proposes to the members to ratify the said appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants.

The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Secretarial Audit

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, GRUH has appointed Mr. M. C. Gupta of M/s M. C. Gupta & Co., a firm of Company Secretaries in practice to undertake the Secretarial Audit of the company. The Report of the Secretarial Audit is annexed herewith as âAnnexure Bâ to this report.

The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Directors and Key Managerial Personnel

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. K. G. Krishnamurthy, Director of the Company, is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment.

Ms. Renu S. Karnad, Non-executive Director of the Company, had briefly stepped down from the Board w.e.f. October 16, 2017 due to limitations on the number of board positions. The board of directors on the recommendations of the Nomination and Remuneration Committee (NRC), and subject to the approval of the members in the ensuing AGM, had appointed Ms. Renu S. Karnad as an Additional Director w.e.f. February 1, 2018.

During the year, the board of directors, on the recommendations of the NRC, had appointed Ms. Bhavna Doshi as an Additional Independent Director w.e.f. January 20, 2018 for a period of five years upto January 19, 2023 subject to the approval of the members in the ensuing AGM.

Mr. Biswamohan Mahapatra, Independent Director of the Company, completed his term on March 18, 2018. The Board of Directors had, on the recommendations of the NRC and subject to the approval of the members in the ensuing AGM, re-appointed Mr. Biswamohan Mahapatra as Independent Director for a second term w.e.f. March 19, 2018 for a period of five years upto March 18, 2023.

Necessary resolutions for the appointment / re-appointment of the aforesaid directors and their detailed profiles have been included in the notice convening the ensuing AGM and details of the proposal for appointment / reappointment are mentioned in the explanatory statement of the notice.

Your directors commend their appointment / re-appointment.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of section 164 of the Companies Act, 2013.

There was no change in the Key Managerial Personnel during the year.

Details of managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as per âAnnexure Câ to this report.

Directorsâ Responsibility Statement

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2018 and of the profit of the Company for the year ended on that date;

iv. The annual accounts of the Company have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed by the Company and such internal financial controls were adequate and were operating effectively;

vi. Systems to ensure compliance with the provisions of all applicable laws are in place and were adequate and operating effectively.

Corporate Social Responsibility Initiatives

In accordance with the provisions of section 135 of the Companies Act, 2013 and the rules framed thereunder, the Company has a Corporate Social Responsibility Committee of directors comprising Mr. Prafull Anubhai - Chairman, Mr. S. G. Mankad, Mr. Pankaj Patel and Mr. Sudhin Choksey and has inter alia also formulated a CSR Policy.

GRUH was required to spend Rs.7.36 crores towards CSR activities during the year. GRUH has approved CSR proposals aggregating to Rs.5.57 crores and incurred CSR expenditure of Rs.4.37 crores during the year. Cumulatively, GRUH has incurred CSR expenditure of Rs.11.92 crores.

The Annual Report on CSR Activities, which forms part of the Directorsâ Report, is annexed as âAnnexure Dâ to this report.

Business Responsibility Reporting

Extract of Annual Return [Form MGT-9]

The details forming part of the extract of the Annual Return in Form MGT 9 is provided as âAnnexure Fâ to this report.

Particulars

Particulars of loans, guarantees or investments made :

Since the Company is a housing finance company, provisions of section 186 of the Companies Act 2013 relating to loans made, guarantees given or securities provided are not applicable to the company.

As regards investments made by the Company, the details of the same are provided under Note to Accounts forming part of the annual accounts of the Company for the year ended March 31, 2018.

Particulars of Contracts or arrangements entered into with related parties:

In accordance with the provisions of section 188 of the Companies Act, 2013 and rules made thereunder, the transactions entered into with related parties are in the ordinary course of business and on an armâs length pricing basis, the details of which are included in the notes forming part of the financial statements. There are no material related party transactions entered during the year. Accordingly, information in form AOC - 2 is not annexed. As required by NHB notification no. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017, a policy on Transactions with Related Parties is given as âAnnexure Gâ to this report.

Material Changes, details of Subsidiaries, Litigations

The Company does not have any subsidiary. There has been no change in the nature of business of the Company.

No significant or material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the company and / or the companyâs operations in future.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

Acknowledgements

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 14, 2018 Chairman

DIN : 00008886

Mar 31, 2017

DIRECTORS'' REPORT

TO THE MEMBERS,

The directors are pleased to present the Thirty first Annual Report of your Company with the audited accounts for the year ended March 31, 2017.

FINANCIAL RESULTS (Rs, in crores)

	For the year ended March 31, 2017	For the year ended March 31, 2016
Profit Before Tax	442.00	361.70
Provision for Tax (Net of deferred tax )	145.35	118.12
Profit After Tax	296.65	243.58
Add:
Balance brought forward from last year	184.14	161.11
Amount available _
for appropriation	480.79	404.69
Appropriations:
Statutory Reserve u/s 29C of NHB Act & u/s 36(1)(viii) of I.T. Act 84.00		69.85
General Reserve	65.00	50.00
Proposed Dividend	-	83.65
Additional Tax on Proposed Dividend -		17.03
Dividend pertaining to previous year paid during the year	-	0.02
Balance carried to Balance Sheet	331.79	184.14
	480.79	404.69

Dividend

The Board of Directors had approved the Dividend Distribution Policy in line with the SEBI Listing Regulations. The Policy is provided as ''Annexure A'' to this report.

In line with the said Policy, your directors recommend payment of dividend of Rs, 2.80 per equity share of face value of Rs, 2 each amounting to Rs, 122.86 crores (including tax thereon of Rs, 20.78 crores) for the year ended March 31, 2017 as against a dividend of Rs, 2.30 per share of face value of Rs, 2 each for the previous year. The dividend payout ratio for the year inclusive of additional tax on dividend will remain at 41%. As per Companies (Accounting Standards) Amendment Rules, 2016, dividend and tax thereon will be recognized as liability on approval of shareholders at the ensuing Annual General Meeting (AGM).

Changes in Share Capital

During the year, the paid up equity share capital increased as a result of allotment of 8,82,744 equity shares of the face value of Rs, 2/- each upon exercise of stock options under ES0S-2011 and ES0S-2015. As at March 31, 2017, the equity share capital stood at Rs, 72,91,28,968 divided into 36,45,64,484 equity shares of Rs, 2/- each.

Disbursements

Loan disbursements during the year were Rs, 4,125 crores as against Rs, 3,857 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs, 3,654 crores to 42,525 families. Cumulative disbursements as at March 31, 2017 were Rs, 23,197 crores.

Rural Housing

During the year, GRUH disbursed Rs, 1,979 crores in respect of 22,854 loans in the rural areas. Cumulative disbursement under the rural housing has been Rs, 10,671 crores in respect of 2,02,221 loans. Rural area as defined by the National Housing Bank (NHB) is a location where population is less than 50,000 as per the 1991 census. Under the Rural Housing Fund scheme of NHB, GRUH branded a special loan product - Shubh Lakshmi aimed at financing women applicants and disbursed Rs, 458 crores in respect of 4,751 loans during the year.

Affordable Housing

The Ministry of Housing and Urban Poverty Alleviation (MHUPA) - The Government of India under "Housing For All by 2022" mission announced the Pradhan Mantri Awas Yojana (PMAY) which has 4 components aimed at addressing the housing requirement of the Affordable Housing segment. One of the components viz. the Credit Linked Subsidy Scheme (CLSS), under the PMAY offers interest subsidy for the EWS/LIG and MIG segments for families having annual family income up to Rs, 18.00 lacs p.a. A maximum subsidy up to Rs, 2.67 lacs can be claimed under the scheme depending on the segment and loan amount.

GRUH signed MOU with NHB to promote the CLSS scheme and received interest subsidy aggregating Rs, 123 crores in respect of 6,149 beneficiaries so far and credited the subsidy to the respective customers'' loan accounts.

Loan Assets

As at March 31, 2017, the loan assets increased to Rs, 13,244 crores recording a growth of 19%. Loan assets in respect of the retail segment grew by 18% and stood at Rs, 12,649 crores.

Non-Performing Loans

As per the prudential norms of NHB, GRUH''s gross non-performing loans stood at Rs, 40.58 crores as at March 31, 2017, constituting 0.31% of the total outstanding loans of Rs, 13,244 crores. The gross nonperforming loans as at March 31, 2016 were '' 35.55 crores constituting 0.32% of the total outstanding loans of Rs, 11,115 crores.

GRUH is required to carry a provision of Rs, 53.87 crores on standard individual home loans of Rs, 12,205 crores and a provision of Rs, 9.02 crores on standard loans other than individual home loans of Rs, 999 crores as at March 31, 2017. GRUH also carries provision of Rs, 0.22 crore on Installments Due from Borrowers of Rs, 40 crores and Rs, 0.02 crore on Loan Against Deposit and interest accrued thereon of Rs, 1.57 crores. GRUH has made the required provisions and carries a total provision of Rs, 63.13 crores in respect of standard assets.

GRUH is required to carry a provision of Rs, 11.50 crores towards nonperforming loans as per NHB norms. However, as a measure of prudence, your directors have decided to carry provision of Rs, 23.95 crores towards NPAs. GRUH also carries provision of Rs, 16.63 crores as contingencies. GRUH therefore carries a total provision of Rs, 103.71 crores on its total assets including standard assets and non-performing loans. Net Non-Performing Loans were Nil on outstanding loans of Rs, 13,244 crores.

During the year, GRUH has written off Rs, 0.51 crore in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could affect recoveries of Rs, 0.31 crore during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

Borrowings

NHB Refinance

GRUH availed refinance aggregating to Rs, 515 crores during the year. The entire refinance was drawn under the Rural Housing Fund (RHF) Scheme. The refinance outstanding as at March 31, 2017 was Rs, 3,771 crores.

Bank Term Loans

GRUH received fresh sanctions from banks amounting to Rs, 1,800 crores of which GRUH availed loans aggregating to Rs, 1,423 crores. The outstanding bank term loans as at March 31, 2017 were Rs, 4,320 crores.

Subordinated Debt

As at March 31, 2017, GRUH''s outstanding subordinated debt stood at Rs, 35 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of "ICRA AAA" and "CRISIL AAA" indicating highest degree of safety regarding timely payment of financial obligations. Based on the balance term to maturity, as at March 31, 2017, Rs, 35 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs amounting to Rs, 1,940 crores on a private placement basis. The outstanding NCDs as at March 31, 2017 stood at Rs, 2,387 crores. NCDs are rated "ICRA AAA" and "CRISIL AAA" indicating highest degree of safety regarding timely payment of financial obligations.

Commercial Paper

GRUH''s commercial paper is rated "ICRA A1 " and "CRISIL A1 " indicating very strong degree of safety regarding timely payment of financial obligations. As at March 31, 2017, outstanding commercial paper was Nil.

Deposits

GRUH mobilised deposits of Rs, 521 crores and experienced a renewal ratio of 42.89% during the year. The outstanding balance of deposits as at March 31, 2017 was Rs, 1,505 crores.

GRUH''s Deposit programme is rated "MAAA" by ICRA and "FAAA" by CRISIL. These ratings indicate very strong degree of safety as regards timely repayment of principal and interest.

Investments

GRUH continues to maintain its Statutory Liquidity Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs, 220 crores as at March 31, 2017 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Unclaimed Deposits and Unclaimed NCDs

As at March 31, 2017, deposits amounting to Rs, 26 crores had not been claimed by 2,423 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

Accordingly, an amount of Rs, 4.79 lacs in respect of unclaimed deposits and interest thereon was transferred to the IEPF during the year.

As at March 31, 2017, there was no NCDs amount or interest thereon, remaining unclaimed and unpaid.

Unclaimed Dividends

As at March 31, 2017, dividend amounting to Rs, 1.55 crores has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of section 125 of the Companies Act, 2013, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs, 7.43 lacs in respect of the financial year 2008-09 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs, 9.71 lacs in respect of the financial year 2009-10 is due for transfer to IEPF in August 2017.

Risk Management Framework

GRUH has a Risk Management framework approved by the Board of Directors. GRUH''s Risk Management framework provides the mechanism for risk assessment and mitigation. The Board has delegated responsibility of overseeing Risk Management framework to the Audit Committee. The Risk Management Committee (RMC) of GRUH comprises the Managing Director, the Executive Director and members of Senior Management.

During the year, the RMC reviewed the risks associated with the business of GRUH, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

The observations of the Audit Committee if any, on the ALM are reported to the board.

Regulatory Guidelines

GRUH''s Capital Adequacy Ratio stood at 18.32% as against the minimum requirement of 12%. Tier - I capital was 16.82% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitization Asset Reconstruction and Security Interest of India (CERSAI) under section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH is registered with CERSAI and has been submitting data in respect of its loans.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, in-house training programmes were provided to employees, inter alia in lending operations, recoveries, KYC, IT system & security and accounts. Employees were also nominated for training programmes conducted by NHB and other institutions. 222 employees underwent different training programmes.

GRUH''s staff strength as at March 31, 2017 was 664.

Particulars of Employees

GRUH had 2 employees as at March 31, 2017 employed throughout the year who were in receipt of remuneration of Rs, 1.02 crore or more per annum or Rs, 8.50 lakh or more per month if employed for part of the year.

In accordance with the provisions of section 197 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, the name and other particulars of such employees are set out in the annex to the Directors'' Report. However, as per the provisions of section 136 of the Companies Act, 2013, the Directors'' Report is being sent to all shareholders of the Company excluding the annex. The annex is available for inspection by the members at the registered office of the Company during business hours on working days up to the date of ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Employees Stock Option Schemes

The stock options granted to directors and employees operate under the schemes ESOS-2011 and ESOS-2015. There has been no material variations in the terms of the options granted under any of the schemes and all the schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014. The disclosures as required under Regulation 14 of the said regulations have been placed on the website of the Company.

Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under, the Company has implemented a policy on Prevention of Sexual Harassment of Women at Workplace. An Internal Complaints Committee has been set up to receive complaints, investigate the matter and report to the management.

During the year, no complaint was received by the committee.

Awards and Recognitions

GRUH has won the Silver Trophy of The Financial Express CFO of the Year Award 2017 in the Large Enterprises - Services Category.

Auditors

Statutory Auditors

In accordance with the requirement of the Companies Act, 2013, the current Statutory Auditors, M/s. Sorab S. Engineer & Co., Chartered Accountants (Firm Registration No. 110417W), hold office up to the conclusion of the ensuing AGM. As per the provisions of section 139 of the Companies Act, 2013, M/s. Sorab S. Engineer & Co., Chartered Accountants are not eligible for re-appointment for a fresh term.

The Board of Directors places on record its appreciation for the services rendered by M/s. Sorab S. Engineer & Co., as the Statutory Auditors of the Company.

The Board of Directors of the Company, on the recommendation of the Audit Committee, has considered and recommended the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No. 117366W/W-100018) as Statutory Auditors for a term of five years beginning from the conclusion of the 31^st AGM till the conclusion of the 36^th AGM subject to approval of members at the ensuing AGM.

The Statutory Auditors have not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Secretarial Audit

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, GRUH has appointed Mr. M.C. Gupta of M/s M.C. Gupta & Co., a firm of Company Secretaries in practice to undertake the Secretarial Audit of the company. The Report of the Secretarial Audit is annexed herewith as ''Annexure B'' to this report.

The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Directors and Key Managerial Personnel

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Kamlesh Shah, Executive Director of the Company, is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment.

Mr. Rohit C. Mehta and Mr. S. M. Palia, Independent Directors of the Company, have completed their term on March 31, 2017 and they have stepped down from the Board of the Company thereafter on completion of their term. The Board of directors places on record its appreciation for the valuable advice given and contributions made by Mr. Rohit C. Mehta and Mr. S. M. Palia during their association with the Company.

During the year, the Board of directors, on the recommendations of the Nomination and Remuneration Committee (NRC), had appointed Mr. Pankaj Patel as an Additional Independent director w.e.f. March

16, 2017 for a period of five years up to March 15, 2022 subject to the approval of the members in the ensuing AGM. The Board of directors, on the recommendations of the NRC, had appointed Mr. Rajesh N Gupta as an Additional Independent director w.e.f. April 17, 2017 for a period of five years up to April 16, 2022 subject to the approval of the members in the ensuing AGM.

Mr. Prafull Anubhai and Mr S. G. Mankad, Independent Directors of the Company, have completed their term on March 31, 2017. The Board of directors had, on the recommendations of the NRC and subject to the approval of the members in the ensuing AGM, re-appointed Mr. Prafull Anubhai as Independent Director for a second term w.e.f. April 1, 2017 for a period of two years up to March 31, 2019 and Mr S. G. Mankad as Independent Director for a second term w.e.f. April 1, 2017 for a period of five years up to March 31, 2022.

The existing tenure of Mr. Sudhin Choksey as Managing Director and Mr. Kamlesh Shah as Executive Director came to an end on March 31,

2017. The Board of directors had, on the recommendations of the NRC and subject to the approval of the members in the ensuing AGM, re-appointed Mr. Sudhin Choksey as a whole-time director, designated as Managing Director and Mr. Kamlesh Shah as a whole-time director, designated as Executive Director w.e.f. April 1, 2017 for a period of three years up to March 31, 2020 as per the terms specified in the draft agreement to be placed before the ensuing AGM.

Your directors commend their appointment / re-appointment.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of section 164 of the Companies Act, 2013.

There was no other change in the Key Managerial Personnel during the year.

Details of managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given as per ''Annexure C'' to this report.

Directors'' Responsibility Statement

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at the end of March 31, 2017 and of the profit of the Company for the year ended on that date;

iv. The annual accounts of the Company have been prepared on a going concern basis;

v. Internal financial controls have been laid down to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi. Systems to ensure compliance with the provisions of all applicable laws are in place and operating effectively.

Corporate Social Responsibility Initiatives

In accordance with the provisions of section 135 of the Companies Act, 2013 and the rules framed there under, the Company has a Corporate Social Responsibility Committee of Directors comprising Mr. Prafull Anubhai - chairman, Mr. S. G. Mankad, Mr. Pankaj Patel and Mr. Sudhin Choksey and has inter alia also formulated a CSR Policy.

GRUH was required to spend Rs, 6.04 crores towards CSR activities during the year. GRUH has approved CSR proposals aggregating to Rs, 2.71 crores and incurred CSR expenditure of Rs, 3.36 crores during the year. Cumulatively, GRUH has incurred CSR expenditure of Rs, 7.55 crores.

The Annual Report on CSR Activities, which forms part of the Directors'' Report, is annexed as ''Annexure D'' to this report.

Business Responsibility Reporting

As required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) (LODR) Regulations, 2015, Business Responsibility Report forms part of the Directors'' Report and is annexed as ''Annexure E'' to this report.

Extract of Annual Return [Form No. MGT-9]

The details forming part of the extract of the Annual Return in Form MGT 9 is provided as ''Annexure F'' to this report.

Particulars

Particulars of loans, guarantees or investments made

Since the Company is a housing finance company, provisions of section 186 of the Companies Act 2013 relating to loans made, guarantees given or securities provided are not applicable to the company.

As regards investments made by the Company, the details of the same are provided under Note to Accounts forming part of the annual accounts of the Company for the year ended March 31, 2017.

Particulars of Contracts or arrangements entered into with related parties:

In accordance with the provisions of section 188 of the Companies Act, 2013 and rules made there under, the transactions entered into with related parties are in the ordinary course of business and on an arm''s length pricing basis, the details of which are included in the notes forming part of the financial statements. There are no material related party transactions entered during the year. Accordingly, information in form AOC - 2 is not annexed. As required by NHB notification no. NHB.HFC.CG-DIR.1/MD&CEO/2016 dated February 9, 2017, a policy on Transactions with Related Parties is given as ''Annexure-G'' to this report.

Material Changes, details of Subsidiaries, Litigations

The Company does not have any subsidiary. There has been no change in the nature of business of the Company.

No significant or material Orders have been passed by the regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company''s operations in future.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

In accordance with the SEBI (LODR) Regulations, 2015 and NHB Directions dated February 9, 2017, the Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

Acknowledgements

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 17, 2017 Chairman

DIN : 00008886

Mar 31, 2015

TO THE MEMBERS,

The directors are pleased to present the Twenty Ninth Annual Report of your Company with the audited accounts for the year ended March 31, 2015.

FINANCIAL RESULTS

(Rs.in crores)

For the For the year ended year ended March 31, March 31, 2015 2014

Profit Before Tax 300.84 244.46

Provision for Tax 77.71 67.50

Deferred Tax on Special Reserve 19.33 0.00

Profit After Tax 203.80 176.96

Add:

Balance brought forward from last year 143.59 110.12

Amount available for appropriation 347.39 287.08

Appropriations:

Special Reserve 56.87 45.00

General Reserve 40.00 20.00

Additional Reserve u/s 29C of NHB Act, 1987 0.00 15.00

Amount utilised towards Corporate

Social Responsibility Activities 1.93 0.00

Proposed Dividend 72.68 54.04

Additional Tax on Proposed Dividend 14.80 9.18

Dividend pertaining to previous

year paid during the year 0.00 0.27

Balance carried to Balance Sheet 161.11 143.59

347.39 287.08

Dividend

Your directors recommend payment of dividend of Rs. 2.00 per equity share of face value of Rs. 2 each for the year ended March 31, 2015 on the enhanced paid-up capital of the Company post the issue of bonus shares in the ratio of 1:1. Considering that the Company declared a 1:1 bonus during the year, the effective dividend for the year is Rs. 4.00 per equity share (pre-bonus) as compared to Rs. 3.00 per share in the previous year. Although the bonus shares were allotted on June 11, 2014, dividend on these shares will be payable for the entire financial year. The dividend payout ratio for the year inclusive of additional tax on dividend will be 43% as against 36% in the previous year.

Changes in Share Capital

During the year under review, the paid up share capital increased as a result of the 1:1 Bonus Issue, whereby your Company allotted 18.01.31.150 Bonus shares. The paid up share capital also increased as a result of allotment of 31,22,280 equity shares of the face value of Rs. 2/- each upon exercise of stock options under ESOS-2011 (Tranche-I) and ESOS-2011 (Tranche-II). Consequently the equity share capital has increased from Rs. 36,02,62,300 divided into 18.01.31.150 equity shares of Rs. 2/- each to Rs. 72,67,69,160 divided into 36,33,84,580 equity shares of Rs. 2/- each.

Disbursements

Loan disbursements during the year were Rs. 3,120.87 crores as against Rs. 2,577.47 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs. 2,834.37 crores to 34,608 families. Cumulative disbursements as at March 31, 2015 were Rs. 15,215.12 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs. 1,296.14 crores in respect of 18,719 dwelling units during the year under the Golden Jubilee Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs. 5,379.87 crores in respect of 1,24,113 dwelling units.

Rural Housing Fund

The National Housing Bank (NHB) has formulated a scheme called the Rural Housing Fund - 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker Section category as defined in the Reserve Bank of India guidelines on lending to the priority sector.

During the year, GRUH disbursed Rs. 301.06 crores in respect of 4,679 loans in rural areas wherein the loans meet the criteria laid down under the scheme.

Urban Low Income Housing Scheme

The Ministry of Housing and Urban Poverty Aliavation (MHUPA) launched a special scheme called the Urban Low Income Housing Scheme (LIH) in January 2012 to finance families in the EWS / LIG segment in urban areas. NHB is the nodal agency for monitoring this scheme.

During the year, GRUH disbursed Rs. 428.52 crores in respect of 8,845 loans in urban areas wherein the loans meet the criteria laid down under the scheme. The cumulative disbursement under the scheme since its inception in January 2012 is Rs. 1,331.42 crores in respect of 27,979 loans.

Refinance Scheme for Women

NHB launched a special refinance scheme in July 2013 aimed at financing women applicants in urban areas wherein the property is owned by women.

During the year, GRUH disbursed Rs. 86.55 crores in respect of 1,168 loans in urban areas wherein the loans meet the criteria laid down under the scheme. The cumulative disbursements under the scheme since its inception in July 2013 is Rs. 146.87 crores in respect of 2,076 loans.

Credit Risk Guarantee Fund Scheme

Under the Credit Risk Guarantee Fund Scheme (CRGFS) for Low Income Housing in urban areas, GRUH has disbursed Rs. 37.09 crores in respect of 1,935 loans during the year. The cumulative disbursements in respect of loans covered by Credit Risk Guarantee Cover is Rs. 39.54 crores in respect of 2,008 loans.

The cumulative portfolio approved by the CRGFT for Credit Risk Guarantee cover is Rs. 4.25 crores in respect of 110 loans since inception of the scheme.

Loan Assets

As at March 31, 2015, the loan assets increased to Rs. 8,915.35 crores recording a growth of 27%. Loan assets in respect of the retail segment grew by 26% and stood at Rs. 8,594.60 crores.

Non-Performing Loans

As per the prudential norms of NHB, GRUH''s gross non-performing loans stood at Rs. 25.05 crores as at March 31, 2015, constituting 0.28% of the total outstanding loans of Rs. 8,915.35 crores. The gross non-performing loans as at March 31, 2014 were Rs. 18.87 crores constituting 0.27% of the total outstanding loans of Rs. 7,009.04 crores.

GRUH is required to carry a provision of Rs. 32.80 crores on standard individual home loans of Rs. 8,200.30 crores and a provision of Rs. 6.20 crores on standard loans other than individual home loans of Rs. 690 crores as at March 31, 2015. GRUH also carries provision of Rs. 0.10 crore on Installments Due from Borrowers of Rs. 22.49 crores and Rs. 0.01 crore on Loan Against Deposit of Rs. 1.14 crores. Accordingly, GRUH carries a total provision of Rs. 39.11 crores in respect of standard assets.

GRUH is required to carry a provision of Rs. 8.47 crores towards non- performing loans as per NHB norms. However, as a measure of precaution, GRUH carries a provision of Rs. 25.05 crores. Net Non Performing Loan was Nil on outstanding loans of Rs. 8,915.35 crores.

GRUH therefore carries a total provision of Rs. 64.17 crores on its total assets including standard assets and non performing loans.

During the year, GRUH has written off Rs. 2.03 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs. 0.37 crore during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

Regulatory Guidelines

GRUH continues to comply with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, ''Know Your Customer'' - (KYC), fair practices code and real estate and capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-a-vis risk management.

GRUH''s Capital Adequacy Ratio stood at 15.36% as against the minimum requirement of 12%. Tier - I capital was 13.89% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under Section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH is registered with CERSAI and has been submitting data in respect of its loans.

NHB Refinance

GRUH received refinance sanction of Rs.1,150 crores from NHB during the year. GRUH availed refinance aggregating to Rs. 940.23 crores including Rs. 130.67 crores under the Rural Housing Fund. The refinance outstanding as at March 31, 2015 was Rs. 2,777.17 crores.

Bank Term Loans

GRUH received fresh sanctions from banks amounting to Rs. 2,065 crores of which GRUH availed loans aggregating to Rs. 1,925 crores. The outstanding bank term loans as at March 31, 2015 were Rs. 2,700 crores.

Subordinated Debt

As at March 31, 2015, GRUH''s outstanding subordinated debt stood at Rs. 35 crores. The debt is subordinated to present and future senior indebtedness of the Company and has been assigned rating of "ICRA AA " and "CRISIL AA ", indicating high safety with regard to timely payment of interest and principal. Based on the balance term to maturity, as at March 31, 2015, Rs. 35 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs amounting to Rs. 650 crores on a private placement basis. The outstanding NCDs as at March 31, 2015 stood at Rs. 650 crores. NCDs are rated "ICRA AA " and "CRISIL AA ", indicating high safety with regard to timely payment of interest and principal.

Commercial Paper

GRUH''s commercial paper is rated "ICRA A1 " and "CRISIL A1 " indicating highest safety as regards repayment. As at March 31, 2015, outstanding commercial paper was Rs. 750 crores.

Deposits

GRUH mobilised deposits of Rs. 396.63 crores and experienced a renewal ratio of 58% during the year. The outstanding balance of deposits as at March 31, 2015 was Rs. 1,292.11 crores.

Deposit programme is rated "MAAA" by ICRA and "FAAA" by CRISIL. These ratings indicate highest safety as regards repayment of principal and interest.

There has been no default in repayment of deposits or payment of interest during the year. All the deposits accepted by the Company are in compliance with the requirements of NHB guidelines and Chapter V of the Companies Act, 2013.

Unclaimed Deposits and Unclaimed NCDs

As at March 31, 2015, deposits amounting to Rs. 7.97 crores had not been claimed by 879 depositors. The total amount of unclaimed deposits as at March 31, 2015 was Rs. 8.40 crores, which includes Rs. 0.43 crore towards unclaimed interest on deposits. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 125 of the Companies Act, 2013, deposits/ NCDs or interest thereon, remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. Accordingly, an amount of Rs. 9.60 lacs was transferred to the IEPF during the year. In terms of Section 125 of the Companies Act, 2013, no claim would lie against the Company after the said transfer.

As at March 31, 2015, there was no NCDs amount or interest thereon, remaining unclaimed and unpaid.

Unclaimed Dividends

As at March 31, 2015, dividend amounting to Rs. 1.05 crores has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 125 of the Companies Act, 2013, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs. 4.47 lacs in respect of the financial year 2006-07 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs. 5.78 lacs in respect of the financial year 2007-08 is due for transfer to IEPF in August 2015. In terms of Section 125 of the Companies Act, 2013, no claim would lie against the Company after the said transfer.

In terms of the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has made the relevant disclosures to the Ministry of Corporate Affairs (MCA) regarding unclaimed dividends and unclaimed matured deposits along with interest accrued thereon. The Company has uploaded the prescribed information on www.iepf.gov.in and www.gruh.com.

Risk Management Framework

The Company has a Risk Management framework approved by the Board of Directors. Company''s Risk Management framework provides the mechanism for risk assessment and mitigation. The Board has delegated responsibility of overseeing Risk Management framework to the Audit Committee. The Risk Management Committee (RMC) of the Company comprises the Managing Director, the Executive Director and members of Senior Management.

During the year, the RMC reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 172.37 crores as at March 31, 2015 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, in-house training programmes were provided to employees inter alia i n lending operations, recoveries, KYC, IT system & security and accounts. Employees were also nominated to training programmes conducted by NHB and other institutions. 264 employees underwent different training programmes.

GRUH''s staff strength as at March 31, 2015 was 579.

Particulars of Employees

GRUH had 2 employees as at March 31, 2015 employed throughout the year who were in receipt of remuneration of Rs. 60 lacs or more per annum.

In accordance with the provisions of Section 197 of the Companies Act, 2013, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors'' Report. However, as per the provisions of Section 136 of the Companies Act, 2013, the Directors'' Report is being sent to all shareholders of the Company excluding the annex. The annex is available for inspection by the members at the registered office of the Company during business hours on working days up to the date of ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of the said annex may write to the Company Secretary at the registered office of the Company.

Changes in the Key Managerial Personnel (KMP)

During the year, Mr. Jayesh Jain, Chief Financial Officer (CFO) and KMP resigned from the Company w.e.f. August 19, 2014. Mr. Hitesh Agrawal who was holding the position of the Manager (Accounts) of the Company since October 2007, was appointed as the Chief Financial Officer (CFO) and KMP of the Company w.e.f. January 19, 2015.

Corporate Social Responsibility Initiatives

In accordance with the provisions of Section 135 of the Companies Act, 2013 and the rules framed there under, the Company has a Corporate Social Responsibility Committee of Directors comprising Mr. S. M. Palia - Chairman, Mr. Rohit C. Mehta, Mr. Prafull Anubhai, Mr. S. G. Mankad and Mr. Sudhin Choksey and has inter alia also formulated a CSR Policy.

The role of the CSR Committee is to review the CSR policy, indicate activities to be undertaken by the Company towards CSR activities and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR initiatives.

During the year under review, your Company contributed and utilised Rs. 1.93 crores towards Corporate Social Responsibility Activities. The Annual Report on CSR Activities, which forms part of the Directors'' Report is annexed as "Annexure A" to this report.

Employees Stock Option Schemes

The stock options granted to directors and eligible employees operate under the schemes ESOS-2011 and ESOS-2015. The disclosures as required under Clause 12 of the erstwhile SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999 read with the provisions of Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 are made in "Annexure B" to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Accounts), 2014 are not applicable to GRUH. GRUH does not have any foreign exchange earnings and expenditure.

Directors

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. K. G. Krishnamurthy, director of the Company is liable to retire by rotation at the ensuing AGM and is eligible for re-appointment.

During the year, the Board of directors on the recommendations of the Nomination and Remuneration Committee had appointed Mr. Biswamohan Mahapatra as an Additional Director and an Independent director w.e.f. March 19, 2015 for a period of 3 continuous years for a term upto March 18, 2018, subject to the approval of the members in the general meeting.

The 5 year tenure of Mr. Kamlesh Shah as Executive Director came to an end on April 15, 2015. The Board of directors had, on the recommendations of the Nomination and Remuneration Committee and subject to the approval of the members in the general meeting, re-appointed Mr. Kamlesh Shah as a whole-time director, designated as Executive Director effective April 16, 2015 for a period upto March 31, 2017 as per the terms specified in the draft agreement to be placed before the ensuing AGM.

Necessary resolutions for the appointment / re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM and details of the proposal for appointment / re- appointment are mentioned in the explanatory statement of the notice.

Your directors commend their appointment / re-appointment.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164 of the Companies Act, 2013.

Disclosures on Managerial Remuneration

Details of Managerial remuneration as required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as per "Annexure C" to this report.

Auditors

At the 28th Annual General meeting held on May 28, 2014, the members had appointed M/s Sorab S. Engineer & Co., Chartered Accountants, having registration number 110417W as the statutory auditors of the Company for a period of 3 years upto March 31, 2017, subject to them ratifying the said appointment at every AGM.

The Company has received a confirmation from M/s Sorab S. Engineer & Co., Chartered Accountants, to the effect that their appointment, if made, at the ensuing AGM would be in terms of Sections 139 and 141 of the Companies Act, 2013 and rules made there under. The board proposes to the members to ratify the said appointment of M/s Sorab S. Engineer & Co., Chartered Accountants.

Directors'' Responsibility Statement

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

v. Internal controls have been laid down to be followed by the Company and such internal controls were adequate and were operating effectively.

vi. Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Extract of Annual Return [Form No. MGT-9]

The details forming part of the extract of the Annual Return in Form MGT-9 is provided as "Annexure D" to this report.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. M. C. Gupta of M/s M. C. Gupta & Co., a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as "Annexure E".

Explanations or comments by the Board on every qualification, reservation or adverse remark or disclaimer made by the Statutory Auditor in his report and by the Company Secretary in Practice in his Secretarial Audit Report

The Statutory Auditors have not given any qualification, reservation or made any adverse remarks or disclaimer in their Audit Report.

The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Particulars of loans, guarantees or investments made

Since the Company is a housing finance Company, the disclosure regarding particulars of loans given, guarantees given and security provided is exempt under the provisions of Section 186 (11) of the Companies Act, 2013.

As regards investments made by the Company, the details of same are provided under Note 12 and Note 15 forming part of the Annual Accounts of the Company for the year ended March 31, 2015.

Particulars of Contracts or arrangements entered into with related parties

During the year, the Company has not entered into any contracts or arrangements with related parties which attracted the provisions of Section 188 of the Companies Act, 2013.

Material Changes, Details of Subsidiaries and Litigations

There has been no material changes and commitment, affecting the financial position of the Company which has occurred between the end of the financial year to which the financial statements relate and the date of the report.

The Company does not have any subsidiary. There has been no change in the nature of business of the Company.

No significant or material Orders have been passed by the regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company''s operations in future.

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

In accordance with Clause 49 of the listing agreements, the Management Discussion and Analysis Report and the Report of the Directors on Corporate Governance form part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 16, 2015 Chairman

Mar 31, 2014

The directors are pleased to present the Twenty Eighth Annual Report of your Company with the audited accounts for the year ended March 31, 2014.

FINANCIAL RESULTS (Rs. in Crores)

For the For the year ended year ended March 31, March 31, 2014 2013

Profit Before Tax 244.46 196.81

Provision for Tax (Net of deferred tax) 67.50 50.93

Profit After Tax 176.96 145.88

Add:

Balance brought forward from last year 110.12 83.70

Amount available for appropriation 287.08 229.58

Appropriations:

Special Reserve 45.00 37.00

General Reserve 20.00 17.50

Additional Reserve u/s 29C of NHB Act, 1987 15.00 12.50

Proposed Dividend 54.04 44.62

Additional Tax on Proposed Dividend 9.18 7.58

Dividend pertaining to previous year paid during the year 0.27 0.26

Balance carried to Balance Sheet 143.59 110.12

287.08 229.58

Dividend

Your directors recommend payment of dividend of Rs. 3.00 per share of face value of Rs. 2 each for the year ended March 31, 2014 as against a dividend of Rs. 2.50 per share of face value of Rs. 2 each for the previous year. The dividend payout ratio for the year, inclusive of additional tax on dividend will be 36%.

Bonus Issue

Your directors recommend an issue of bonus shares in the ratio of one equity share of Rs. 2 each for every one existing equity share of Rs. 2 each of the Company held by the members on a date to be fixed by the board, by capitalising a part of the Securities Premium Account / General Reserve. The proposed issue of bonus shares is subject to the consent of shareholders at the forthcoming Annual General Meeting (AGM). The bonus shares shall rank pari passu in all respects with the existing fully paid up equity shares of the Company, including any dividend that may be declared for the financial year in which the bonus shares are allotted. The dividend declared for the year ended March 31, 2014 shall not be applicable on the Bonus Shares.

Increase in Authorised Share Capital

In order to facilitate the capitalisation of the Securities Premium Account to the extent of issue of bonus shares, the authorised share capital of the Company is being increased from Rs. 50 crores to Rs. 100 crores by creation of 25 crores equity shares of Rs. 2 each.

Disbursements

Loan disbursements during the year were Rs. 2,577.47 crores as against Rs. 2,174.39 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs. 2,375.10 crores to 31,555 families. Cumulative disbursements as at March 31, 2014 were Rs. 12,094.25 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs. 856.13 crores in respect of 14,081 dwelling units during the year under the Golden Jubilee Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs. 4,083.73 crores in respect of 1,05,394 dwelling units.

Rural Housing Fund

The National Housing Bank (NHB) has formulated a scheme called the Rural Housing Fund Â 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker section category as defined in the Reserve Bank of India guidelines on lending to the priority sector. During the year, GRUH has claimed Rs. 27.38 crores covering 582 families under this scheme. Cumulative disbursements under this scheme were Rs. 859.25 crores to 23,026 families.

Urban Low Income Housing Scheme

The Ministry of Housing and Urban Poverty Alleviation (MHUPA) has launched a special scheme called the Urban Low Income Housing Scheme to finance families in the EWS / LIG segment in urban areas. NHB is the nodal agency for monitoring this scheme. GRUH has funded customers falling under this scheme and has sent its claim to NHB aggregating to Rs. 109.37 crores in respect of 1,987 customers during the year.

Credit Risk Guarantee Fund Scheme

The Government of India has launched the Credit Risk Guarantee Fund Scheme for Low Income Housing in urban areas. GRUH has signed the agreement with the Credit Risk Guarantee Fund Trust (CRGFT) for participating in the scheme. A claim in respect of 33 loan accounts aggregating to Rs. 1.15 crores has been sent to CRGFT.

Loan Assets

As at March 31, 2014, the loan assets increased to Rs. 7,009.04 crores recording a growth of 29%. Loan assets in respect of the retail segment grew by 31% and stood at Rs. 6,801.02 crores.

Non-Performing Loans

As per the prudential norms of NHB, GRUH''s gross non- performing loans stood at Rs. 18.87 crores as at March 31, 2014, constituting 0.27% of the total outstanding loans of Rs. 7,009.04 crores. The gross non-performing loans as at March 31, 2013 were Rs. 17.64 crores, constituting 0.32% of the total outstanding loans of Rs. 5,437.80 crores.

As at March 31, 2014, GRUH is required to carry a provision of Rs. 7.60 crores towards non-performing loans as per NHB norms. However, as a measure of precaution, GRUH carries a provision of Rs. 19.64 crores. Net non-performing loans were Nil on outstanding loans of Rs. 7,009.04 crores.

During the year, GRUH has written off Rs. 0.77 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could affect recoveries of Rs. 0.25 crores during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

NHB Refinance

GRUH received refinance sanction of Rs. 875 crores from NHB during the year. GRUH availed refinance aggregating to Rs. 1,304.23 crores including Rs. 27.38 crores under the Rural Housing Fund. The refinance outstanding as at March 31, 2014 was Rs. 2,946.58 crores.

Bank Term Loans

GRUH received sanctions from banks amounting to Rs. 2,675 crores of which GRUH availed loans aggregating to Rs. 1,615 crores. The outstanding bank term loans as at March 31, 2014 were Rs. 1,915 crores.

Subordinated Debt

As at March 31, 2014, GRUH''s outstanding subordinated debt stood at Rs. 35 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of "ICRA AA " and "CRISIL AA ", indicating high safety with regard to timely payment of interest and principal. These ratings carry a stable outlook. Based on the balance term to maturity, as at March 31, 2014, Rs. 35 crores of the book value of subordinated debt is considered as Tier Â II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH did not raise any NCDs on a private placement basis. The outstanding NCDs as at March 31, 2014 stood at Rs. 80.70 crores. NCDs are rated "ICRA AA ", indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook.

Commercial Paper

GRUH''s commercial paper is rated "CRISIL A1 " and "ICRA A1 " indicating highest safety as regards repayment. These ratings carry a stable outlook. As at March 31, 2014, outstanding commercial paper was Rs. 455 crores.

Deposits

GRUH mobilised deposits of Rs. 452.51 crores and experienced a renewal ratio of 59.31% during the year. The outstanding balance of deposits as at March 31, 2014 was Rs. 1,002.88 crores.

Deposit programme is rated "FAAA" by CRISIL and "MAAA" by ICRA. These ratings indicate highest safety as regards repayment of principal and interest. Both ratings carry a stable outlook.

Unclaimed Deposits

As at March 31, 2014, public deposits amounting to Rs. 3.57 crores had not been claimed by 681 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. Accordingly, an amount of Rs. 1.52 lacs was transferred to the IEPF during the year. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

Unclaimed Dividends

As at March 31, 2014, dividend amounting to Rs. 90.16 lacs has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 205C of the Companies Act, 1956, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs. 4.20 lacs in respect of the financial year 2005-06 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs. 4.69 lacs in respect of the financial year 2006-07 is due for transfer to IEPF in August 2014. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

During the year, unclaimed Rights Issue Refund money aggregating to Rs. 19,650/- in respect of the financial year 2005- 06 remaining unclaimed for a period of seven years with the Company was transferred to IEPF.

Dematerialisation of Shares

As at March 31, 2014, 98.10% of equity shares of GRUH have been dematerialised by shareholders through National Securities Depository Limited and Central Depository Services (India) Limited.

Risk Management Framework

The Company has a Risk Management Framework, which provides the mechanism for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises the Managing Director, the Executive Director and members of senior management.

During the year, the RMC reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks and efficacy of mitigation measures.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 123.12 crores as at March 31, 2014 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Regulatory Guidelines

Over and above the provisioning required for non performing assets, GRUH is required to carry a provision of Rs. 25.76 crores on standard individual home loans of Rs. 6,441.33 crores and a provision of Rs. 5.06 crores on standard loans other than individual home loans of Rs. 548.84 crores as at March 31, 2014. Accordingly, GRUH carries a total provision of Rs. 50.46 crores (Rs. 19.64 crores in respect of non performing assets and Rs. 30.82 crores in respect of standard assets).

GRUH continues to comply with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, ''Know Your Customer'' - (KYC), fair practices code and real estate and capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. NHB has not levied any penalty on GRUH during the year.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-Ã -vis risk management.

GRUH''s Capital Adequacy Ratio stood at 16.37% as against the minimum requirement of 12%. Tier Â I capital was 14.71% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH is registered with CERSAI and has been submitting data in respect of its loans.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavors are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, besides the in-house induction training programmes in lending operations, recoveries and accounts, employees were also nominated to training programmes conducted by NHB and other institutions. 382 employees underwent different training programmes.

GRUH''s staff strength as at March 31, 2014 was 546.

Employees Stock Option Scheme

The stock options granted to directors and eligible employees operates under the scheme ESOS-2011. The disclosures as required under Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999, as amended, have been made in the annex to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

GRUH does not have any foreign exchange earnings and expenditure. Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to GRUH.

Particulars of Employees

GRUH had 2 employees as at March 31, 2014 employed throughout the year who were in receipt of remuneration of Rs. 60 lacs or more per annum.

In accordance with the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors'' Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors'' Report is being sent to all shareholders of the Company excluding the annex. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Directors

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. Kamlesh Shah, director is liable to retire by rotation at the ensuing AGM and is eligible for re- appointment. Mr S.M. Palia, Mr. Rohit C Mehta, Mr Prafull Anubhai and Mr. S G. Mankad, directors of the Company, are being appointed as independent directors for three consecutive years for a term upto March 31, 2017 as per provisions of Section 149 and other applicable provisions of the Companies Act 2013.

Subject to the approval of the members in the general meeting, the Board of Directors re-appointed Mr Sudhin Choksey as Managing Director effective April 1, 2014 for a period of 3 years as per the terms specified in the draft agreement to be placed before the ensuing AGM.

Necessary resolutions for the appointment /re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM and details of the proposal for appointment / re-appointment are mentioned in the explanatory statement of the notice.

Your directors commend their appointment / re-appointment.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1)(g) of the Companies Act, 1956.

Auditors

M/s. Sorab S. Engineer & Co., Chartered Accountants, statutory auditors of the Company having registration number 110417W retire at the ensuing AGM and are eligible for re-appointment.

The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed. The statutory auditors have also confirmed that they hold a valid certificate issued by the "Peer Review Board" of The Institute of Chartered Accountants of India.

Management Discussion and Analysis Report and Report of the Directors on Corporate Governance

In accordance with clause 49 of the listing agreements, the Management Discussion and Analysis Report and Report of the Directors on Corporate Governance form part of this report.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 11, 2014 Chairman

Mar 31, 2013

TO THE MEMBERS,

The directors are pleased to present the Twenty Seventh Annual Report of your Company with the audited accounts for the year ended March 31, 2013.

FINANCIAL RESULTS (Rs. in Crores)

For the For the year ended year ended March 31, March 31, 2013 2012

Profit Before Tax 196.81 162.76

Provision for Tax (Net of deferred tax) 50.93 42.42

Profit After Tax 145.88 120.34

Add:

Balance brought forward from last year 83.70 61.15

Amount available for appropriation 229.58 181.49

Appropriations:

Special Reserve 37.00 28.00

General Reserve 17.50 15.00

Additional Reserve u/s 29C of NHB Act, 1987 12.50 7.50

Proposed Dividend 44.62 40.60

Additional Tax on Proposed Dividend 7.58 6.59

Dividend pertaining to previous year paid during the year 0.26 0.10

Balance carried to Balance Sheet 110.12 83.70

229.58 181.49

Dividend

Your directors recommend payment of dividend of Rs. 2.50 per share of face value of Rs. 2 each for the year ended March 31, 2013 against a dividend of Rs. 11.50 per share of face value of Rs. 10 each for the previous year (Rs. 2.30 per equity share of face value of Rs. 2 each). The dividend payout ratio for the year, inclusive of additional tax on dividend will be 36%.

Sub-division of Shares

Pursuant to your approval at the 26th Annual General Meeting (AGM) of the Company held on June 18, 2012, the nominal face value of equity shares of the Company was sub-divided from Rs. 10 per equity share to Rs. 2 per equity share, with effect from July 26, 2012.

To facilitate this sub-division, shareholders were issued 5 equity shares of Rs. 2 each in lieu of one equity share of Rs. 10 each held by them as on the record date i.e. July 25, 2012, fixed for this purpose.

Total number of retail shareholders has increased to 17,775 representing an increase of 32% post sub-division of shares.

Disbursements

Loan disbursements during the year were Rs. 2,174.39 crores as against Rs. 1,486.52 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs. 1,877.08 crores to 26,370 families. Cumulative disbursements as at March 31, 2013 were Rs. 9,516.78 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs. 724.96 crores in respect of 12,094 dwelling units during the year under the Golden Jubilee Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs. 3,227.60 crores in respect of 91,313 dwelling units.

Rural Housing Fund

The National Housing Bank (NHB) has formulated a scheme called the Rural Housing Fund - 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker section category as defined in the Reserve Bank of India guidelines on lending to the priority sector. During the year, GRUH has claimed Rs. 168.87 crores covering 3,942 families under this scheme. Cumulative disbursements under this scheme were Rs. 831.87 crores to 22,444 families.

Urban Low Income Housing Scheme

The Ministry of Housing and Urban Poverty Allievation (MHUPA) has launched a special scheme called the Urban Low Income Housing Scheme to finance families in the EWS / LIG segment in urban areas. The NHB is the nodal agency for monitoring this scheme. GRUH has funded customers falling under this scheme and has sent its claim to NHB aggregating Rs. 21.05 crores in respect of 668 customers during the year.

Credit Risk Guarantee Fund Scheme

The Government of India has launched the Credit Risk Guarantee Fund Scheme for Low Income Housing in urban areas. GRUH has signed the agreement with the Credit Risk Guarantee Fund Trust for participating in the scheme.

Loan Assets

As at March 31, 2013, the loan assets increased to Rs. 5,437.80 crores recording a growth of 34%. Loan assets in respect of the retail segment grew by 34% and stood at Rs. 5,194.28 crores.

Non-Performing Loans

As per the prudential norms of NHB, GRUH''s non-performing loans stood at Rs. 17.64 crores as at March 31, 2013, constituting 0.32% of the total outstanding loans of Rs. 5,437.80 crores. The non-performing loans as at March 31, 2012 were Rs. 21.11 crores, constituting 0.52% of the total outstanding loans of Rs. 4,066.80 crores.

As at March 31, 2013, GRUH is required to carry a provision of Rs. 6.58 crores towards non-performing loans as per NHB norms. However, as a measure of precaution, GRUH carries a provision of Rs. 14.94 crores. Net non-performing loans was Rs. 2.70 crores on outstanding loans of Rs. 5,437.80 crores.

During the year, GRUH has written off Rs. 1.59 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs. 2.26 crores during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

NHB Refinance

GRUH received refinance sanction of Rs. 925 crores from NHB during the year. GRUH availed refinance aggregating to Rs. 495.20 crores including Rs. 168.87 crores under the Rural Housing Fund. The refinance outstanding as at March 31, 2013 was Rs. 2,310.10 crores.

Bank Term Loans

GRUH received sanctions from banks amounting to Rs. 1,215 crores of which GRUH availed loans aggregating to Rs. 1,184.50 crores. The outstanding bank term loans as at March 31, 2013 were Rs. 1,364.50 crores.

Subordinated Debt

During the year, GRUH retired subordinated debt aggregating to Rs. 40 crores raised in the FY 2005-06. GRUH issued subordinated debt during the year. As at March 31, 2013, GRUH''s outstanding subordinated debt stood at Rs. 35 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of "ICRA AA " by ICRA Limited (ICRA) and "CRISIL AA " by CRISIL, indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. Based on the balance term to maturity, as at March 31, 2013, Rs. 35 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs of Rs. 350 crores on private placement basis. The NCDs are rated "ICRA AA " by ICRA, indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. The outstanding NCDs as at March 31, 2013 were Rs. 491.70 crores.

Commercial Paper

GRUH raised Rs. 4,625 crores through issuance of commercial paper during the year. GRUH''s short term borrowings including commercial paper and short term NCD is rated "CRISIL A1 " and "ICRA A1 ". This rating indicates highest safety regarding timely payment of Financial obligations. Both ratings carry a stable outlook. The outstanding balance of commercial paper as at March 31, 2013 was Rs. 50 crores.

Deposits

GRUH mobilised deposits of Rs. 277.52 crores and experienced a renewal ratio of 57.48% during the year. The outstanding balance of deposits as at March 31, 2013 was Rs. 649.95 crores.

During the year, CRISIL has upgraded GRUH''s fixed deposit programme rating to FAAA from FAA . The rating indicates Highest Safety as regards repayment of principal and interest. ICRA has retained GRUH''s rating for its fixed deposit programme at MAA . The rating of MAA indicates High Safety as regards repayment of principal and interest. Both ratings carry a stable outlook.

Unclaimed Deposits

As at March 31, 2013, public deposits amounting to Rs. 3.04 crores had not been claimed by 680 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer. Accordingly, an amount of Rs. 5.83 lacs was transferred to the IEPF during the year.

Unclaimed Dividends

As at March 31, 2013, dividend amounting to Rs. 77.61 lacs has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 205C of the Companies Act, 1956, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs. 3.99 lacs in respect of the financial year 2004-2005 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs. 4.38 lacs in respect of the financial year 2005-2006 is due for transfer to IEPF in August 2013. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

Dematerialisation of Shares

As at March 31, 2013, 97.92% of equity shares of GRUH have been dematerialised by shareholders through National Securities Depository Limited and Central Depository Services (India) Limited.

Risk Management Framework

The Company has a Risk Management Framework, which provides the mechanism for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises the Managing Director, the Executive Director and some members of senior management.

During the year, the RMC reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 79.10 crores as at March 31, 2013 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Regulatory Guidelines

Over and above the provisioning required for non performing assets, GRUH is required to carry a provision of Rs. 19.79 crores on standard individual home loans of Rs. 4,946.93 crores and a provision of Rs. 4.73 crores on standard loans other than individual home loans of Rs. 473.24 crores as at March 31, 2013. Accordingly, GRUH carries a total provision of Rs. 39.46 crores (Rs. 14.94 crores in respect of Non Performing Assets and Rs. 24.52 crores in respect of Standard Assets).

GRUH continues to comply with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, ''Know Your Customer'' - (KYC), fair practices code and real estate and capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. NHB has not levied any penalty on GRUH during the year.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-a-vis risk management.

GRUH''s Capital Adequacy Ratio stood at 14.56% as against the minimum requirement of 12%. Tier - I capital was 12.93% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under section 21 of the SARFAESI Act, 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH has registered with CERSAI and submitted data in respect of all outstanding loans as at March 31, 2013.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, besides the in-house induction training programmes in lending operations, recoveries and accounts, employees were also nominated to training programmes conducted by NHB and other institutions. 226 employees underwent different training programmes.

GRUH''s staff strength as at March 31, 2013 was 517.

SAFA Award

South Asian Federation of Accountants (SAFA) has awarded "Certificate of Merit" to GRUH for its Annual Report for the year ended March 31, 2011. A certificate was awarded to GRUH in the category ''Financial Services Sector''.

Employees Stock Option Scheme

The stock options granted to directors and eligible employees operate under two schemes, i.e. ESOS-2007 and ES0S-2011. The disclosures as required under Clause 12 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999, as amended, have been made in the annex to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

GRUH does not have any foreign exchange earnings and expenditure. Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to GRUH.

Particulars of Employees

GRUH had 2 employees as at March 31, 2013 employed throughout the year who were in receipt of remuneration of Rs. 60 lacs or more per annum.

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors'' Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors'' Report is being sent to all shareholders of the Company excluding the annex. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Directors

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. Keki M. Mistry, Ms. Renu Sud Karnad and Mr. S. G. Mankad, directors of the Company, retire by rotation at the ensuing AGM and are eligible for re- appointment. Your directors commend their re-appointment.

Necessary resolutions for the re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1)(g) of the Companies Act, 1956.

Auditors

M/s. Sorab S. Engineer & Co., Chartered Accountants, statutory auditors of the Company having registration number 110417W retire at the ensuing AGM and are eligible for re-appointment.

The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The statutory auditors have also confirmed that they hold a valid certificate issued by the "Peer Review Board" of The Institute of Chartered Accountants of India.

Corporate Governance - Voluntary Guidelines

The Board of Directors have taken cognisance of the ''Corporate Governance Voluntary Guidelines 2009'' issued by the Ministry of Corporate Affairs (MCA) in December 2009. While the guidelines are recommendatory in nature, the board recognises the importance and need to constantly assess governance practices thereby ensuring a sustainable business environment that generates long-term value to all key stakeholders. The board has adopted several provisions of the said guidelines.

Directors'' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

Management Discussion and Analysis Report

In accordance with clause 49 of the listing agreements, the Management Discussion and Analysis Report forms a part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

New Delhi Keki M. Mistry

April 12, 2013 Chairman

Mar 31, 2012

The directors are pleased to present the Twenty Sixth Annual Report of your Company with the audited accounts for the year ended March 31, 2012.

FINANCIAL RESULTS (Rs in Crores)

For the For the year ended year ended March 31, March 31, 2012 2011

Profit Before Tax 162.76 125.57

Provision for Tax (Net of deferred tax) 42.42 34.06

Profit After Tax 120.34 91.51

Add:

Balance brought forward from last year 61.15 45.88

Amount available for appropriation 181.49 137.39

Appropriations:

Special Reserve 28.00 22.00

General Reserve 15.00 9.20

Additional Reserve

u/s 29C of NHB Act, 1987 7.50 0.00

Proposed Dividend 40.60 38.67

Additional Tax on Proposed Dividend 6.59 6.28

Dividend pertaining to previous year paid during the year 0.10 0.09

Balance carried to Balance Sheet 83.70 61.15

181.49 137.39

Dividend

Your directors recommend payment of dividend of Rs 11.50 per share of face value of Rs 10 each for the year ended March 31, 2012 against a dividend of Rs 11 per share (including a special dividend of Rs 2.50 per share to commemorate the Company's Silver Jubilee year) of face value of Rs 10 each for the previous year. The dividend payout ratio for the year, inclusive of additional tax on dividend will be 39%.

Sub Division of Shares

Your directors have approved the sub-division of the nominal face value of the equity shares of the Company from Rs 10 per equity share to Rs 2 per equity share, subject to the approval of the members at the 26th Annual General Meeting (AGM) of the Company. The requisite resolutions for approval of the members have been set out in the notice convening the AGM.

Disbursements

Loan disbursements during the year were Rs 1,486.52 crores as against Rs 1,210.69 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs 1,295.59 crores to 21,586 families. Cumulative disbursements as at March 31, 2012 were Rs 7,342.39 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs 528.03 crores in respect of 10,126 dwelling units during the year under the Golden Jubilee Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs 2,502.64 crores in respect of 79,219 dwelling units.

Rural Housing Fund

The National Housing Bank (NHB) has formulated a scheme called the Rural Housing Fund - 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker section category as defined in the RBI guidelines on lending to the priority sector. During the year, GRUH has claimed Rs 162.08 crores covering 3,922 families under this scheme. Cumulative disbursements under this scheme were Rs 663 crores to 18,502 families.

Loan Assets

As at March 31, 2012, the loan assets increased to Rs 4,077.43 crores with a growth of 28%. Loan assets in respect of retail segment also grew by 27% and stood at Rs 3,901.25 crores.

Non-Performing Loans

As per the prudential norms of NHB, GRUH's Non-Performing Loans stood at Rs 21.11 crores as at March 31, 2012 constituting 0.52% of the total outstanding loans of Rs 4,077.43 crores. The Non-Performing Loans at the end of the previous year were Rs 25.86 crores, constituting 0.81% of the total outstanding loans of Rs 3,176.85 crores.

GRUH is required to carry a provision of Rs 7.18 crores towards Non-Performing Loans as at March 31, 2012 as per the norms of NHB. However, as a measure of caution, GRUH carries a provision of Rs 21.12 crores. Net Non-Performing Loans of GRUH was "NIL" on the outstanding loans of Rs 4,077.43 crores as at March 31, 2012.

During the year, GRUH has written off Rs 1.39 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs 5.85 crores during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

NHB Refinance

GRUH received refinance sanction of Rs 1,450 crores from NHB during the year. GRUH availed refinance aggregating to Rs 1,201.44 crores including Rs 162.08 crores under RHF. The refinance outstanding as at March 31, 2012 was Rs 1,893.34 crores.

Bank Term Loans

GRUH received sanctions from banks amounting to Rs 2,225 crores of which GRUH availed loans aggregating to Rs 1,575 crores. The outstanding bank term loans as at March 31, 2012 were Rs 1,302.50 crores.

Subordinated Debt

GRUH did not issue any subordinated debt during the year. As at March 31, 2012, GRUH's outstanding subordinated debt stood at Rs 40 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of "ICRA AA " by ICRA Limited (ICRA), indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. Based on the balance term to maturity, as at March 31, 2012, Rs Nil of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequacy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs of Rs 141.70 crores on private placement basis. The NCDs are rated "ICRA AA " by ICRA, indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. The outstanding NCDs as at March 31, 2012 were Rs 141.70 crores.

Commercial Paper

GRUH raised Rs 2,240 crores through issuance of commercial paper during the year. GRUH's commercial paper is rated "CRISIL A1 " by CriSIL Limited (CRISIL), indicating high safety as regards repayment. This rating carries a stable outlook. As at March 31, 2012, outstanding commercial paper was Nil.

Deposits

GRUH mobilised deposits of Rs 324.65 crores and experienced a renewal ratio of 48.14% during the year. The outstanding balance of deposits as at March 31, 2012 was Rs 455.46 crores. The rating assigned to GRUH's deposit programme has been maintained by the two rating agencies viz. ICRA and CRISIL. GRUH's deposits are rated "MAA " and "FAA " by ICRA and CRISIL respectively and both the ratings indicate high safety as regards timely repayment of principal and interest. These ratings carry a stable outlook.

Unclaimed Deposits

As at March 31, 2012, public deposits amounting to Rs 3.75 crores had not been claimed by 872 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer. Accordingly, an amount of Rs 5.24 lacs was transferred to the IEPF during the year.

Unclaimed Dividends

As at March 31, 2012, dividend amounting to Rs 62.96 lacs has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 205C of the Companies Act, 1956, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs 3.73 lacs in respect of the financial year 2003 -2004 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs 4.06 lacs in respect of the financial year 2004-2005 is due for transfer to IEPF in July 2012. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

Dematerialisation of Shares

As at March 31, 2012, 97.59% of equity shares of GRUH have been dematerialised by shareholders through National Securities Depository Limited and Central Depository Services (India) Limited.

Pursuant to an amendment to Clause 5A of the Listing Agreements, the Company affirms that there are no share certificates issued to its shareholders in physical form which are lying unclaimed.

Risk Management Framework

The Company has a Risk Management Framework, which provides the mechanism for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises the Managing Director, the Executive Director and some members of senior management.

During the year, the RMC reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committee and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs 45.30 crores as at March 31, 2012 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Regulatory Guidelines

NHB has introduced provisioning on standard individual home loans during the year. NHB has stipulated a rate of provisioning of 0.40% on standard home loans. NHB has also enhanced the requirement of provisioning on standard non-residential property loans from 0.40% to 1.00%. As a result, GRUH is required to carry a provision of Rs 14.81 crores on standard individual home loans of Rs 3,703.70 crores and a provision of Rs 3.53 crores on standard non-residential property loans of Rs 352.62 crores as at March 31, 2012. GRUH has utilised an amount of Rs 7.80 crores (net of deferred tax of Rs 3.74 crores) from General Reserve in respect of the standard individual home loans at the beginning of financial year of Rs 2,884.53 crores.

NHB also enhanced the provisioning requirement in respect of non-performing loans on sub-standard loan from 10% to 15% and on bad & doubtful loans from the band of 20% - 50% to the band of 25%-100%.

NHB has directed housing finance companies (HFCs) to not levy prepayment fee on preclosure of housing loans with effect from October 19, 2011.

NHB has also directed HFCs to apply uniform rate of interest to the old and new home loan customers who have similar risk profiles. This direction is to be implemented in the financial year 2012-13.

GRUH has complied with these regulatory changes as directed by NHB.

GRUH continues to comply with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, 'Know Your Customer' - (KYC), fair practices code and real estate & capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis Report.

The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. NHB has not levied any penalty on GRUH during the year.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-a-vis risk management.

GRUH's Capital Adequacy Ratio stood at 13.95% as against the minimum requirement of 12%. Tier - I capital was 13.29% against the minimum requirement of 6%.

The Government of India has set up the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) under section 21 of the SARFAESI Act 2002 to have a central database of all mortgages created by lending institutions. The object of this registry is to compile and maintain data relating to all transactions secured by mortgages. Accordingly, GRUH has registered with CERSAI and submitted data in respect of all outstanding loans as at March 31, 2012.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, besides the in-house induction training programmes in lending operations, recoveries and accounts, employees were also nominated to training programmes conducted by NHB and other institutions.

GRUH's staff strength as at March 31, 2012 was 473.

Employees Stock Option Scheme

The stock options granted to directors and eligible employees operate under two schemes, i.e. ES0S-2007 and ES0S-2011. The disclosures as required under Clause 12.1 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999, as amended, have been made in the annex to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

GRUH does not have any foreign exchange earnings and expenditure. Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to GRUH.

Particulars of Employees

GRUH had 1 employee as at March 31, 2012 employed throughout the year who was in receipt of remuneration of Rs 60 lacs or more per annum.

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors' Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors' Report is being sent to all shareholders of the Company excluding the annex. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Directors

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. Prafull Anubhai and Mr. K. G. Krishnamurthy, directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and are eligible for re-appointment. Your directors commend their re-appointment.

Necessary resolutions for the re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(1)(g) of the Companies Act, 1956.

Auditors

M/s. Sorab S. Engineer & Co., Chartered Accountants, statutory auditors of the Company having registration number 110417W retire at the ensuing AGM and are eligible for re-appointment.

The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The statutory auditors have also confirmed that they hold a valid certificate issued by the "Peer Review Board" of The Institute of Chartered Accountants of India.

Corporate Governance - Voluntary Guidelines

The Board of Directors have taken cognisance of the 'Corporate Governance Voluntary Guidelines 2009' issued by the Ministry of Corporate Affairs (MCA) in December 2009. While the guidelines are recommendatory in nature, the board recognises the importance and need to constantly assess governance practices thereby ensuring a sustainable business environment that generates long-term value to all key stakeholders. The board has adopted several provisions of the said guidelines.

Directors' Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

Management Discussion and Analysis Report

In accordance with clause 49 of the listing agreements, the Management Discussion and Analysis Report forms a part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 24, 2012 Chairman

Mar 31, 2011

The directors are pleased to present the Twenty Fifth Annual Report of your Company with the audited accounts for the year ended March 31, 2011.

FINANCIAL RESULTS (Rs. in Crores)

For the For the year ended year ended March 31, March 31, 2011 2010

Profit Before Tax 125.57 94.42

Provision for Tax (Net of deferred tax) 34.06 25.46

Profit After Tax 91.51 68.96

Add:

Balance brought forward from last year 45.88 27.64 Amount available for appropriation 137.39 96.60

Appropriations:

Special Reserve 22.00 17.50

General Reserve 9.20 6.90

Proposed Dividend 38.67 22.57

Additional Tax on

Proposed Dividend 6.28 3.75

Dividend pertaining to previous year paid during the year 0.09 0.00

Balance carried to Balance Sheet 61.15 45.88

137.39 96.60

Dividend

Your directors recommend payment of dividend of Rs. 8.50 per share of face value of Rs. 10 each for the year ended March 31, 2011 and in addition, also recommended a special dividend of Rs. 2.50 per share of face value ofRs. 10 each to commemorate the Silver Jubilee of the Company. The total dividend for the year is Rs. 11 per share against a dividend of Rs. 6.50 per share of face value of Rs. 10 each for the previous year. The dividend payout ratio for the year, inclusive of additional tax on dividend will be 49%.

Disbursements

Loan disbursements during the year were Rs. 1,210.69 crores as against Rs. 780.33 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs. 1080.73 crores to 19,557 families. Cumulative disbursements as at March 31, 2011 were Rs. 5,855.87 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs. 413.07 crores in respect of 8,722 dwelling units during the year under the Golden Jubilee Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs. 1,974.61 crores in respect of 69,093 dwelling units.

Rural Housing Fund (RHF)

The National Housing Bank (NHB) has formulated a scheme called the Rural Housing Fund - 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker section category as defined in the RBI guidelines on lending to the priority sector. During the year, GRUH has claimed Rs. 196.38 crores covering 4,686 families under this scheme. Cumulative disbursements under this scheme were Rs. 500.92 crores to 14,580 families.

Loan Assets

As at March 31, 2011, the loan assets increased to Rs. 3,176.85 crores with a growth of 29%. Loan assets in respect of retail segment also grew by 30% and stood at Rs. 3,080.21 crores.

Non-Performing Assets (NPAs)

As per the prudential norms of NHB, GRUHs NPAs stood at Rs. 25.86 crores as at March 31, 2011 constituting 0.81% of the total outstanding loans ofRs. 3,176.85 crores. The NPAs at the end of the previous year were Rs. 27.14 crores, constituting 1.11% of the total outstanding loans of Rs. 2,453.70 crores.

GRUH is required to carry a provision of Rs. 6.37 crores towards NPAs and standard assets other than housing loan to individuals as at March 31, 2011 as per the norms of NHB. However, as a measure of caution, GRUH carries a provision of Rs. 27.92 crores. Net NPAs of GRUH was "NIL" on the outstanding loans ofRs. 3,176.85 crores as at March 31, 2011.

During the year, GRUH has written off Rs.1.26 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans of earlier years and could effect recoveries of Rs. 1.27 crores during the year in respect of such written off loans. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

NHB Refinance

GRUH received refinance sanction of Rs. 800 crores from NHB during the year. GRUH availed refinance aggregating to Rs. 545.65 crores including Rs. 145.65 crores under RHF. The refinance outstanding as at March 31, 2011 was Rs. 1,157.60 crores.

Bank Term Loans

GRUH received sanctions from banks amounting to Rs. 1,400 crores of which GRUH availed loans aggregating to Rs. 1,000 crores. The outstanding bank term loans as at March 31, 2011 were Rs. 1,230 crores.

Subordinated Debt

GRUH did not issue any subordinated debt during the year. As at March 31, 2011, GRUHs outstanding subordinated debt stood at Rs. 40 crores. The debt is subordinated to present and future senior indebtedness of the Company and has been assigned rating of "LAA+" by ICRA Limited (ICRA), indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. Based on the balance term to maturity, as at March 31, 2011, Rs. 8 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of Capital Adequecy Ratio.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs of Rs. 100 crores on private placement basis. The NCDs are rated "LAA+" by ICRA, indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. The outstanding NCDs as at March 31, 2011 were Rs. 100 crores.

Commercial Paper

GRUH raised Rs. 1,185 crores through issuance of commercial paper during the year. GRUHs commercial paper is rated "P1+" by CRISIL Limited (CRISIL), indicating high safety as regards repayment. This rating carries a stable outlook. As at March 31, 2011, outstanding commercial papers were stood at Rs. 160 crores.

Deposits

GRUH mobilised deposits of Rs. 106.72 crores and experienced a renewal ratio of 42% during the year. The outstanding balance of deposits as at March 31, 2011 was Rs. 278.73 crores. The rating assigned to GRUHs deposit programme has been maintained by the two rating agencies viz. ICRA and CRISIL. GRUHs deposits are rated "MAA+" and "FAA+" by ICRA and CRISIL respectively and both the ratings indicate high safety as regards timely repayment of principal and interest. These ratings carry a stable outlook.

Unclaimed Deposits

As at March 31, 2011, public deposits amounting to Rs. 3.90 crores had not been claimed by 1,012 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer. Accordingly, an amount of Rs. 4.67 lacs was transferred to the IEPF during the year.

Unclaimed Dividends

As at March 31, 2011, dividend amounting to Rs. 49.78 lacs has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 205C of the Companies Act, 1956, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs. 3.43 lacs in respect of "he financial year 2002-2003 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs. 3.73 lacs in respect of the financial year 2003-2004 is due for transfer to IEPF in August 2011. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

Dematerialisation of Shares

As on March 31, 2011, 97.44% of equity shares of GRUH have been dematerialised by shareholders through National Securities Depository Limited and Central Depository Services (India) Limited.

Pursuant to an amendment to Clause 5A of the Listing Agreements, the Company affirms that there are no share certificates issued to its shareholders in physical form which are lying unclaimed.

Risk Management Framework

The Company has a Risk Management Framework, which provides the mechanism for risk assessment and mitigation. The Risk Management Committee (RMC) of the Company comprises the Managing Director, the Executive Director and some members of senior management.

During the year, the RMC reviewed the risks associated with the business of the Company, its root causes and the efficacy of the measures taken to mitigate the same. Thereafter, the Audit Committe and the Board of Directors also reviewed the key risks associated with the business of the Company, the procedures adopted to assess the risks, efficacy and mitigation measures.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 62.09 crores as at March 31, 2011 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Regulatory Guidelines

GRUH complied with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, Know Your Customer - (KYC), fair practices code and real estate & capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis report.

The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. NHB has not levied any penalty on GRUH during the year.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-a-vis risk management.

GRUHs Capital Adequacy Ratio stood at 13.32% as against the minimum requirement of 12%. Tier -1 capital was 12.98% against the minimum requirement of 6%.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, besides the in-house induction training programmes in lending operations, recoveries and accounts, employees were also nominated to training programmes conducted by NHB and other institutions.

GRUHs staff strength as at March 31, 2011 was 449.

Employees Stock Option Scheme

The stock options granted to directors and eligible employees operate under two schemes, ESOS-2007 and ESOS-2011. The disclosures as required under Clause 12.1 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) guidelines, 1999, as amended, have been made in the annex to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

GRUH does not have any foreign exchange earnings and expenditure. Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to GRUH.

Particulars of Employees

GRUH had 1 employee as at March 31, 2011 employed throughout the year who was in receipt of remuneration of Rs. 60 lacs or more per annum.

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors Report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the Directors Report is being sent to all shareholders of the Company excluding the annex. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Directors

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. S. M. Palia and Mr. Rohit C. Mehta, directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and are eligible for reappointment. Your directors commend their reappointment.

Necessary resolutions for the re-appointment of the aforesaid directors have been included in the notice convening the ensuing AGM.

All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 274(l)(g) of the Companies Act, 1956.

Auditors

M/s. Sorab S. Engineer & Co., Chartered Accountants, statutory auditors of the Company having registration number 110417W retire at the ensuing AGM and are eligible for re-appointment.

The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The statutory auditors have also confirmed that they hold a valid certificate issued by the "Peer Review Board" of The Institute of Chartered Accountants of India.

Corporate Governance - Voluntary Guidelines

The Board of Directors have taken cognisance of the Corporate Governance Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs (MCA) in December 2009. While the guidelines are recommendatory in nature, the board recognises the importance and need to constantly assess governance practices thereby ensuring a sustainable business environment that generates long-term value to all key stakeholders. The board has adopted several provisions of the said guidelines.

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

Management Discussion and Analysis Report

In accordance with clause 49 of the listing agreements, the Management Discussion and Analysis Report forms a part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 13,2011 Chairman

Mar 31, 2010

The directors are pleased to present the Twenty Fourth Annual Report of your Company with the audited accounts for the year ended March 31, 2010.

FINANCIAL RESULTS (Rs. in Crores)

For the For the year ended year ended March 31, March 31, 2010 2009

Profit Before Tax 94.42 69.58

Provision for Tax (Net of deferred tax and FBT) 25.46 19.30

Profit After Tax 68.96 50.28

Add: Balance brought forward from last year 27.64 13.92

Amount Available for __________ __________

Appropriation 96.60 64.20

Appropriations:

Special Reserve 17.50 12.00

General Reserve 6.90 5.10

Proposed Dividend 22.57 16.63

Additional Tax on Proposed Dividend 3.75 2.83

Balance Carried to Balance Sheet 45.88 27.64

96.60 64.20

Dividend

Your directors recommend payment of dividend of Rs. 6.50 per share for the year ended March 31, 2010 as against a dividend of Rs. 4.80 per share for the previous year. The dividend payout ratio for the year, inclusive of additional tax on dividend will be 38%.

Disbursements

Loan disbursements during the year were Rs. 780.33 crores as against Rs. 655.52 crores in the previous year. GRUH continued to focus mainly on the retail segment and disbursed Rs. 701.62 crores to 13,870 families. Cumulative disbursements as at March 31, 2010 were Rs. 4,645.18 crores.

Golden Jubilee Rural Housing Finance Scheme

GRUH disbursed Rs. 257.84 crores in respect of 6,383 dwelling units during the year under the Golden Jubilee

Rural Housing Finance Scheme of the Government of India. Cumulative disbursements under the scheme were Rs. 1,578.12 crores in respect of 60,841 dwelling units.

Rural Housing Fund (RHF)

The National Urban Housing and Habitat Policy 2007, released by the Government of India recommends a multi-pronged strategy for achieving the national goal ofAffordable Housing to All. The rural housing segment, in particular remains underserved, constituting only about 10% of the housing finance market. Keeping this in view, the National Housing Bank (NHB) formulated a scheme called the Rural Housing Fund - 2008 (RHF). The scheme is aimed towards rural housing undertaken by families falling under the weaker section category as defined in the RBI guidelines on lending to the priority sector. During the year, GRUH has claimed Rs. 166.63 crores covering 5,805 families under this scheme. Cumulative disbursements under this scheme were Rs. 304.54 crores to 9,894 families.

Loan Assets

As at March 31, 2010, the loan assets increased to Rs. 2,453.70 crores with a growth of 17%. Loan assets in respect of retail segment also grew by 18% and stood at Rs.2,377.62 crores.

Non-Performing Assets (NPAs)

As per the prudential norms of NHB, GRUHs NPAs stood at Rs. 27.14 crores as at March 31, 2010 constituting 1.11% of the total outstanding loans of Rs. 2,453.70 crores. The NPAs at the end of the previous year were Rs. 19.68 crores, constituting 0.94% of the total outstanding loans of Rs. 2,091.43 crores.

GRUH is required to carry a provision of Rs. 5.75 crores towards NPAs and standard assets of non-housing loans as at March 31, 2010 as per the norms of NHB. However, as a measure of caution, GRUH carries a provision of Rs. 27.92 crores. Net NPAs of GRUH was "NIL" on the outstanding loans of Rs. 2,453.70 crores as at March 31, 2010.

During the year, GRUH has written off Rs. 2.71 crores in respect of individual loans where the recovery was difficult in the near future. However, GRUH continued the recovery efforts in respect of written off loans and could effect recoveries of Rs. 0.74 crores in respect of these loans during the year. GRUH also took possession of properties of the defaulting borrowers under the SARFAESI Act and has sold few of such acquired properties.

NHB Refinance

GRUH received refinance sanction of Rs. 450 crores from NHB during the year. GRUH availed refinance aggregating to Rs. 238.80 crores including Rs. 88.80 crores under RHF. The refinance outstanding as at March 31, 2010 was Rs. 968.83 crores.

Bank Term Loans

GRUH received sanctions from banks amounting to Rs. 950 crores of which GRUH availed loans aggregating to Rs. 700 crores. The outstanding bank term loans as at March 31, 2010 were Rs. 900 crores.

Subordinated Debt

GRUH did not issue any subordinated debt during the year. As at March 31, 2010, GRUHs outstanding subordinated debt stood at Rs. 40 crores. The debt is subordinated to present and future senior indebtedness of the company and has been assigned rating of "LAA+" by ICRA Limited (ICRA), indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. Based on the balance term to maturity, as at March 31, 2010, Rs. 16 crores of the book value of subordinated debt is considered as Tier - II capital under the guidelines issued by NHB for the purpose of computation of CAR.

Non-Convertible Debentures (NCDs)

During the year, GRUH raised NCDs of Rs. 135 crores on private placement basis. The NCDs are rated "LAA+" by ICRA, indicating high safety with regard to timely payment of interest and principal. This rating carries a stable outlook. The outstanding NCDs as at March 31, 2010 were Rs. 135 crores.

Commercial Paper

GRUH raised Rs. 905 crores through issuance of commercial paper during the year. GRUHs commercial paper is rated "P1+" by CRISIL Limited (CRISIL), indicating high safety as regards repayment. This rating carries a stable outlook. As at March 31, 2010, there were no outstanding commercial papers.

Deposits

Despite strong competition from banks and mutual funds, growth in deposits continued during the year. GRUH mobilised deposits of Rs. 109 crores and experienced a renewal ratio of 49% during the year. The outstanding balance of deposits as at March 31, 2010 was Rs. 279.30 crores. The rating assigned to GRUHs deposit programme has been maintained by the two rating agencies viz. ICRA and CRISIL. GRUHs deposits are rated "MAA+" and "FAA+" by ICRA and CRISIL respectively and both the ratings indicate high safety as regards timely repayment of principal and interest. These ratings carry a stable outlook.

Unclaimed Deposits

As at March 31, 2010, public deposits amounting to Rs. 3.96 crores had not been claimed by 1,063 depositors. Depositors were intimated regarding the maturity of deposits with a request to either renew or claim their deposits and subsequent reminders have been sent.

As per the provisions of Section 205C of the Companies Act, 1956, deposits remaining unclaimed and unpaid for a period of seven years from the date they became due for payment are required to be credited to Investor Education and Protection Fund (IEPF) established by the Government of India. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer. Accordingly, an amount of Rs. 1.96 lacs was transferred to the IEPF during the year.

Unclaimed Dividends

As at March 31, 2010, dividend amounting to Rs. 40.57 lacs has not been claimed by shareholders. GRUH has been intimating the shareholders to lodge their claim for dividend from time to time.

As per the provisions of Section 205C of the Companies Act, 1956, dividends remaining unclaimed for a period of seven years from the date of transfer to the unpaid dividend account are required to be credited to the IEPF. Accordingly, unclaimed dividend amount of Rs. 2.96 lacs in respect of the financial year 2001-2002 was transferred to IEPF during the year. Unclaimed dividend amounting to Rs. 3.43 lacs in respect of the financial year 2002-2003 is due for transfer to IEPF in August 2010. In terms of Section 205C of the Companies Act, 1956, no claim would lie against the Company or the said fund after the said transfer.

Investments

GRUH continues to maintain its Statutory Liquid Ratio (SLR) as stipulated by NHB. Accordingly, GRUH carried investments in approved securities aggregating to Rs. 34.71 crores as at March 31, 2010 to meet the requirement of the SLR. GRUH has classified its investments as long-term and valued them at cost. Adequate provision, towards loss, if any, to be experienced on redemption of investments on maturity has been made.

Regulatory Guidelines

GRUH complied with the guidelines issued by NHB regarding accounting standards, prudential norms for asset classification, income recognition, provisioning, capital adequacy, concentration of credit, credit rating, Know Your Customer - (KYC), Fair Practices Code and real estate & capital market exposures. The details of compliances are outlined in the Management Discussion and Analysis report.

The National Housing Bank Act, 1987, empowers NHB to levy a penalty on Housing Finance Companies for contravention of the Act or any of its provisions. NHB has not levied any penalty on GRUH during the year.

GRUH has formulated a risk management framework, which lays the procedure for risk assessment and mitigation. The Risk Management Committee (RMC) comprises of the Managing Director as the Chairman and the members include senior managers holding key positions in the Company. The RMC apprises the Audit Committee of the key risks associated with the business of the Company and the measures to mitigate them.

The task of overseeing the implementation of the Asset Liability Management (ALM) has been entrusted to the Audit Committee which oversees and reviews the ALM position vis-a-vis risk management.

GRUHs Capital Adequacy Ratio stood at 16.55% as against the minimum requirement of 12%. Tier - I Capital was 15.57% against the minimum requirement of 6%.

Human Resource Development

At GRUH, human resource development is considered vital for effective implementation of business plans. Constant endeavours are being made to offer professional growth opportunities and recognitions, apart from imparting training to employees. During the current year, besides the in-house induction training programmes in lending operations, recoveries and accounts, employees were also nominated to training programmes conducted by NHB and other institutions.

GRUHs staff strength as at March 31, 2010 was 372.

Employees Stock Option Scheme

The stock options granted to directors and eligible employees operate under two schemes, namely ESOS-2005 and ESOS- 2007. The disclosures as required under Clause 12.1 of the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, as amended, have been made in the annex to this report.

Particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure

GRUH does not have any foreign exchange earnings and expenditure. Particulars relating to conservation of energy and technology absorption stipulated in the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable to GRUH.

Delisting of Equity Shares

Pursuant to the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, GRUH has completed the process of voluntary delisting of equity shares with the Ahmedabad Stock Exchange Ltd. The equity shares of GRUH have been voluntarily delisted from the Ahmedabad Stock Exchange Ltd. with effect from November 25, 2009, as intimated vide their letter No. ASEL/2009/977 dated November 24, 2009.

Particulars of Employees

GRUH had 2 employees as at March 31, 2010 employed throughout the year who were in receipt of remuneration of Rs. 24 lacs or more per annum.

In accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the name and other particulars of such employees are set out in the annex to the Directors Report. However, as per the provisions of Section 219(l)(b)(iv) of the Companies Act, 1956, the Directors Report is being sent to all shareholders of the Company excluding the annex. Any shareholder interested in obtaining a copy of the said annex may write to the company secretary at the registered office of the Company.

Directors

Mr. S.G. Mankad, IAS (retd), was appointed as an Additional Director on the Board with effect from January 14, 2010. Pursuant to the provisions of Article 121 of the Articles of Association of the Company read with Section 260 of the Companies Act, 1956, Mr. S.G. Mankad holds office upto the date of the ensuing Annual General Meeting. GRUH has received a notice in writing from a member under Section 257 of the Companies Act, 1956, signifying their intention to propose the appointment of Mr. S.G. Mankad as Director of the Company whose period of office as Director shall be subject to determination by the retirement of Directors by rotation. Your directors commend his appointment.

In accordance with Articles 134 and 135 of the Articles of Association of the Company and the provisions of the Companies Act, 1956, Mr. Keki M. Mistry and Ms. Renu S. Karnad, directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and are eligible for re-appointment. Your directors commend their re-appointment.

Mr. Kamlesh Shah was appointed as an Additional Director, designated as Executive Director on the Board with effect from April 16, 2010. Pursuant to the provisions of Article 121 of the Articles of Association of the Company read with Section 260 of the Companies Act, 1956, Mr. Kamlesh Shah holds office upto the date of the ensuing Annual General Meeting. Mr. Kamlesh Shah, a Chartered Accountant has been with GRUH for 19 years and is presently employed as General Manager (Corporate Office). Your directors commend his appointment.

Subject to the approval of members in the General Meeting, the Board of Directors vide circular resolution dated March 19, 2010 effected on March 29, 2010 re-appointed Mr. Sudhin Choksey as Managing Director effective April 1, 2010, for a period of 5 years as per the terms specified in the draft agreement to be placed before the ensuing AGM.

Necessary resolutions for the appointment / re-appointment of the aforesaid directors have been included in the notice convening the AGM.

None of the directors of the Company are disqualified from being appointed as directors as specified in Section 274 of the Companies Act, 1956.

Auditors

M/s. Sorab S. Engineer & Co., Chartered Accountants, statutory auditors of the Company having registration number 110417W retire at the ensuing AGM and are eligible for re-appointment.

The Company has received a certificate from the statutory auditors to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Companies Act, 1956. The statutory auditors have also confirmed that they hold a valid certificate issued by the "Peer Review Board" of The Institute of Chartered Accountants of India.

Directors Responsibility Statement

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956 and based on the information provided by the management, your directors state that:

i. In the preparation of annual accounts, the applicable accounting standards have been followed;

ii. Accounting policies selected were applied consistently. Reasonable and prudent judgements and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2010 and of the profit of the Company for the year ended on that date;

iii. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities;

iv. The annual accounts of the Company have been prepared on a going concern basis.

Management Discussion and Analysis Report

In accordance with clause 49 of the listing agreements, the Management Discussion and Analysis Report forms a part of this report.

Acknowledgements

Your directors take this opportunity to place on record their appreciation to all employees for their hard work, spirited efforts, dedication and loyalty to GRUH. The employees have worked based on principles of honesty, integrity and fair play and this has helped GRUH in maintaining its growth. The directors also wish to place on record their appreciation to shareholders, depositors, referral associates, NHB, financial institutions and banks for their continued support.

On behalf of the Board of Directors

Mumbai Keki M. Mistry

April 16, 2010 Chairman

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