The Directors are pleased to present the Twenty-Eighth Annual Report
on the business and operations of your Company together with the
Audited Statement of Accounts for the year ended 31st March, 2012.
The Financial performance of the Company for year ended 31st March,
2012 is summarized below:-
(Rs. in Crore)
Gross Income 2,469.68 1,451.24
Less : Interest 1,799.23 973.13
Overheads 267.37 168.33
Depreciation 4.72 3.73
Profit before Tax & Exceptional Items 398.36 306.05
Add : Exceptional Items 0.00 35.43
Profit before Tax 398.36 341.48
Less : Provision for taxation 92.00 76.35
Profit after tax 306.36 265.13
Add : Balance b/d from the previous year 69.96 30.35
Surplus available for appropriations 376.32 295.48
Transferred to Special Reserve under
Section 36(1)(viii) of the Income
Tax Act, 1961 100.00 40.00
Transferred to General Reserve 100.00 100.00
Transfer to Contingency Reserve - 35.00
Dividend on Preference Shares - 0.02
Dividend for Earlier Year 0.08 6.59
Proposed Equity Dividend 40.89 36.57
Tax on proposed Dividend 6.51 7.34
Balance carried over to Balance Sheet 128.84 69.96
Total 376.32 295.48
Previous year figures have been regrouped as per Revised Schedule VI of
the Companies Act, 1956 introduced by Ministry of Corporate Affairs
vide notification dated February 28, 2011.
Your Company registered a remarkable growth in its operations. The
operating profit before charging depreciation and tax amounted to Rs.
403.08 crore as against Rs. 309.78 crore in the preceding year;
representing a rise of 30%. Profit After Ta x (PAT) before extra
ordinary items went up by 33% to Rs. 306.36 crore from Rs. 229.70 crore in
the previous year. The EPS improved to Rs. 28.97 as against Rs. 26.43 of
the previous year.
Besides Company''s core business of providing housing finance, it also
carries on vertical businesses such as insurance and property services.
These vertical businesses are operated through Company''s subsidiary
/associate companies which have strong synergies with the Company and
offer the customers wide range of financial products and services under
The Proposed merger of subsidiary First Blue Home Finance Limited and
DHFL Holdings Private Limited with the Company would further
consolidate the Company ''s position in the housing industry.
The cumulative loan disbursements of the Company as at the end of
financial year 2011-12 was Rs. 28,805 crore as compared to Rs. 19,739.76
crore in the previous year. The housing loans/other loan sanctioned
during the year ended 31st March, 2012 were to the extent of Rs.
12,845.31 crore as against Rs. 8,949.48 crore sanctioned during the
The loan disbursed during the year ended 31st March, 2012 was to the
extent of Rs. 9,065.24 crore as against Rs. 6,505.54 crore disbursed during
the previous year.
Sale/assignment of Loans:
During the year, your Company securitized pool of housing and property
loans and managed the joint syndicated loans where banks and others
have participated aggregating to Rs. 1,637.78 crore. These assets have
been de-recognised in the books of the Company. Your Company is
responsible for collection and getting servicing of the securitized
portfolio on behalf of the buyer investor. In terms of the
securitization agreement, your Company pays to
buyer/investor/participant on monthly basis the collection amount,
subject to retention of agreed extra interest spread for the Company.
Instrument through which loans have been sold / assigned have been
rated by external credit rating agencies and carry a rating indicating
the highest degree of safety regarding timely servicing of financial
As at 31st March, 2012, the loan book stood at Rs. 19,355.38 crore as
against Rs. 14,121.98 crore in the previous year an increase of 37.06%.
In view of the overall performance of the Company and the objective of
rewarding shareholders, while retaining capital to maintain a healthy
capital adequacy ratio to support future growth, the Board of Directors
has recommended a dividend of Rs. 3.50 per share (35%) on 11,68,39,981
equity shares of Rs. 10 each for the financial year ended 31st March,
2012, subject to approval of the shareholders at the ensuing Annual
General Meeting, as compared to dividend of Rs. 3.50 per share (35%) for
the financial year ended 31st March, 2011. This dividend shall be
subject to tax on dividend to be paid by the Company. The total outgo
on account of dividend (including dividend distribution tax) will be Rs.
47.53 crore as against Rs. 42.76 crore in the previous year.
Your Company has paid dividend of Rs. 8 lakh and Rs. 1 lakh as tax on
distribution of dividend to new shareholders on account of Final
Dividend for the year 2010-11 as required under the Listing Agreement
as those shares were allotted prior to record date for the dividend
payment and after the date of earlier year balance sheet.
Equity shares that may be allotted on allotment of equity shares under
Employee Stock Option Scheme as well as allotment, if any, of shares
pursuant to approval of Scheme of Amalgamation before the date of the
book closure for payment of dividend shall rank pari passu with the
existing shares will be entitled to receive the dividend for the
financial year 2011-12.
UNCLAIMED DIVIDEND TRANSFERED TO INVESTORS EDUCATION AND PROTECTION
In terms of Section 205C of the Companies Act, 1956, the amount
(dividends) that remained unclaimed and unpaid for more than 7 years
from the date become first due for payment, shall be transferred to
IEPF (Fund). In terms of the applicable statutory provisions of the
Companies Act, 1956, no claim would lie against the Company or the said
Fund after such transfer to IEPF.
The Company has been intimating the shareholders to lodge their claim
for payment due, if any, from time to time and such claims have been
settled. Despite constant and sincere efforts to pay the unclaimed
dividend to the respective shareholders, certain amount still remains
unclaimed. The Company has been intimating the shareholders to lodge
their claim for dividend from time to time and such information is
being mentioned in the Annual Reports every year.
Unclaimed dividend amounting to Rs. 4.97 lakh that has not been claimed
by shareholders for the financial year 2003-04 has been transferred to
Investor Education and Protection Fund (IEPF) during the month of
September, 2011, as per the provisions of the Companies Act, 1956. As
per section 205(B) of the Companies Act, 1956, no claim would lie
against the Company or the said fund after the transfer.
The unpaid and unclaimed amounts lying with company for the last seven
(7) financial years has been uploaded on the Company''s website.
Shareholders who have not claimed the said dividend may write to
Registrars and Share Transfer agents.
During the year, the Company continued with its focus on measures to
improve its net worth.
(a) Qualified Institutional Placement:
Pursuant to a special resolution passed under section 192A of the
Companies (Passing of the resolution by postal ballot) Rules, 2011 by
the shareholders of the Company on 19th January 2012, your Company
issued 1,19,09,873 (One Crore Nineteen Lakh Nine Thousand Eight Hundred
Seventy Three) equity shares of face value of Rs. 10/- each at a price of
Rs. 255.50 per equity (including a premium of Rs. 245.50 per equity share)
aggregating to Rs. 304,29,72,552 (Rupees Three Hundred Four Crore, Twenty
Nine Lakh, Seventy Two Thousand, Five Hundred and Fifty Tw o Only) to
Qualified Institutional Buyers (QIBs) in terms of Chapter VIII of the
Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 (SEBI ICDR Regulations), as amended.
The QIP was opened for subscription to QIBs on Wednesday, 22nd
February, 2012 and closed on Friday, 24th February, 2012. The allotment
of equity shares to QIBs was made on 29th February, 2012. The BSE and
the NSE had given trading permission for the equity shares issued to
QIBs on 2nd March, 2012.
(b) Employee Stock Option Schemes:
During the year under review, the Company allotted in tranches 5,03,706
equity shares of Rs. 10/- each upon exercise of stock options to the
eligible employees of the Company under the Employee Stock Option
Scheme – 2008 and 2009.
In view of above allotments the paid-up equity share capital of the
Company increased from 10,44,26,402 equity shares of Rs. 10/- each as on
31st March, 2011 to 11,68,39,981 equity shares of Rs. 10/- each as on
31st March, 2012.
(c) Equity Shares to be allotted pursuant to the sanctioned Scheme of
On sanction of the Scheme of Amalgamation of First Blue Home Finance
Ltd and DHFL Holdings Private Ltd. with your Company (the Scheme) by
the respective High Courts, the Company will be required to allot an
aggregate of 1,08,86,375 fully paid up equity shares of Rs. 10/- each, to
certain shareholders of First Blue Home Finance Ltd.
Post allotment of the aforesaid shares, the paid- up equity share
capital of the Company will increase to 12,77,26,356 equity shares.
The Company has paid the listing fees payable to the BSE and the NSE
for the financial year 2011-12 in time.
Financial Year 2011-12 turned out to be a year of reckoning for most
countries. India witnessed rapid slowdown in growth, coupled with near
double-digit inflation. Due to inflationary pressures, Reserve Bank of
India had to tighten the monetary policy by increasing the key interest
During the year, your Company raised Rs. 75 crore through the issue of
long-term Unsecured Redeemable Non-Convertible Subordinated Debentures.
The subordinated debt was assigned an ''BWR AAA'' rating by Brickworks
and rating by CARE ''AA ''.
As at 31st March, 2012, your Company''s outstanding subordinated debt
stood at Rs. 655 crore. The debt is subordinated to present and future
senior indebtedness of your Company and has been assigned the rating by
CARE and Brickworks. Based on the balance term to maturity, as at 31st
March, 2012, Rs. 582.00 crore of the book value of subordinated debt is
considered as Tier II under the guidelines issued by the National
Housing Bank (NHB) for the purpose of capital adequacy computation.
Non-Convertible Debentures (NCD):
During the year, your Company issued NCDs amounting to Rs. 730.20 crore
on a private placement basis. The Company''s NCD issues have been listed
on the Wholesale Debt Market (WDM) segment of the NSE. The Company''s
NCDs have been assigned the rating of ''AA '' by CARE and ''BWR AAA'' by
Brickworks. As at 31st March, 2012, NCDs outstanding stood at Rs.
Innovative Perpetual Debt Instrument
During the year under review your Company has issued Innovative
Perpetual Debt Instruments (IPDI) qualifying for Tier II capital in
to increase its capital adequacy ratio and fund its growing business
operations. Your Company has raised the IPDI of principal amount of Rs.
125.20 crore, which qualify as Tier II capital of the Company, in
conformity with NHB guidelines. The IPDI was assigned an ''AA-'' rating
by both CARE and Brickworks.
The Commercial Paper (CP) program of your Company has been rated by
Credit Rating and Information Services of India Limited (CRISIL) and is
assigned the rating of P1 (P One Plus) having validity period of
twelve months. During the year your Company issued CPs to the extent of
Rs. 1,454.40 crore in tranches and placed them with investors'' at the
most competitive rates of interest. As at 31st March, 2012, commercial
papers outstanding stood at Rs. 401.40 crore.
Loans from Banks:
As part of its liability management, your Company endeavors to
diversify its resource base in order to achieve an appropriate maturity
structure and minimize the weighted average cost of borrowed funds.
During the year under review, fresh term loans of Rs. 4,045 crore were
availed from the commercial banks and financial institutions, taking
the total term loan outstanding to Rs. 13,855.39 crore
Refinance from National Housing Bank (NHB):
During the year, your Company has drawn refinance amounting to Rs. 228.00
crore under NHB''s Refinance Scheme to Housing Finance Companies.
During the Year, the Company has achieved consistent Growth. The
Outstanding Deposit as on the 31st March 2012, stood at Rs. 938.81 crore
compared to Rs. 557.29 crore in the previous year. Consistent Increase in
the Investor has also been witnessed taking the Customer Accounts to
Deposit Growth can be sustained only when the existing customers are
retained effectively. It becomes even more critical for investor
customer as investment opportunities are ample. We have taken a
structured approach in sustenance of fixed deposit growth by focusing
on the renewal of maturing fixed deposit database with the help of
Direct Channel. Based on an analysis of the maturing database, a
detailed strategy has been formulated and accordingly an unique
two-fold program was developed which involved sending an unique Direct
Mailer that seeded the thought of reinvestment amongst the depositors
which was followed by a focused tele-calling activity thus reinforcing
the need to reinvest amongst the customers. The opportunities that
arose through these concentrated efforts were disseminated to the
business teams for further fulfillment.
As on 31st March 2012, 975 depositors had not claimed the deposits
amounting to Rs. 5.10 crore. Depositors have been intimated regarding
the maturity of their Deposits, with a request to either renew or claim
their matured deposits. Fixed Deposits accepted by your Company have
been secured appropriately to extent of Floating Charge created by way
of Deed of Trust, as per guidelines issued by NHB.
Your Company has received an A1 credit rating from CRISIL, which was
reaffirmed in May, 2012, for its Rs. 1,500 crore short-term debt program
indicating a very strong degree of safety regarding timely payment of
In April 2012, CARE reaffirmed credit ratings for our fixed deposits
(CARE AA up to Rs. 1,000 crore), our non-convertible debentures (CARE
AA up to Rs. 2,605 crore in aggregate for three instruments) and
subordinated debt (CARE AA up to Rs. 980 crore) and our Innovative
Perpetual Debentures (CARE AA- upto Rs. 300 crore). Your Company has also
obtained credit ratings for its long term bank borrowings (CARE AA
upto amount of Rs. 15,814 crore).
A credit rating of CARE AA indicates that instruments with that rating
are considered by CARE to have a high degree of safety regarding
timely servicing of financial obligations among rated instruments
while a credit rating of CARE AA reflects the comparative standing
within the CARE AA category.
In January, 2012, BWR reaffirmed credit ratings for our fixed deposits
(BWR FAAA up to Rs. 1,000 crore), our non-convertible debentures (BWR AAA
up to Rs. 1,000 crore) and our subordinate debt (BWR AAA for two
instruments of Rs. 250 crore each) for an additional subordinated debt
instrument (BWR AAA up to Rs. 400 crore) and our innovative perpetual
debentures (BWR AA- upto Rs. 300 crore).
A BWR FAAA rating indicates the highest safety in terms of timely
servicing of interest and principal for our fixed deposits and a BWR
AAA credit rating indicates the highest degree of safety regarding
timely servicing of financial obligations, as compared to other rated
As required under NHB Directions your Company is presently required to
maintain a minimum capital adequacy of 12% on a stand-alone basis. In
addition, the NHB Directions also require that your Company transfers
minimum 20% of its annual profits to a reserve fund. The following
table sets out our stand- alone capital adequacy ratios as at March 31
2010, 2011 and 2012.
Particulars As on 31st March
2012 2011 2010
Capital Adequacy 18.24% 19.39% 17.26%
Your Company''s stand-alone capital adequacy ratio was at 18.24%
approximately as on 31st March, 2012, which we believe provides an
adequate cushion to withstand business risks and is above the minimum
requirement of 12% stipulated by the NHB.
NON-PERFORMING ASSETS AND PROVISIONS FOR CONTINGENCY
Your Company adhered to the prudential guidelines for Non performing
Assets (NPAs), issued by the National Housing Bank (NHB) under its
Directions of 2010, as amended from time to time. As per the prudential
norms, the income on such NPAs is not to be recognised.
As per the prudential norms prescribed by the NHB, the Company has made
provision for contingencies on standard as well as non-performing
housing loans and property loans. The Company has also made additional
provision to meet unforeseen contingencies.
The National Housing Bank (NHB) vide its circular dated 5th August,
2011 read with circular dated 19th January, 2012 has introduced
additional contingency provisioning requirements. The Company has met
this requirement by utilising excess reserve created in earlier year
and by making further provision during the year. As a matter of prudent
risk management and based on experience, the Company has created on its
own in the past, additional reserve on its standard assets towards
contingencies beyond the NHB requirements. The Company has fully
utilised these additional contingency reserve for meeting the
additional requirements of NHB and has also provided for the balance.
The Securitizations and Reconstructions of Financial Assets and
Enforcement of Security Interest Act 2002 (SARFAESI) has proved to be a
useful recovery tool and the Company has been able to successfully
initiate recovery action under this Act in the case of willful
defaulters. The Company has acquired certain assets under SARFAESI
which are retained for the purpose of sale under the rules and
regulations of SARFAESI involving Rs. 14.03 crore.
BRANCH EXPANSION & BUSINESS TIE- UP
Your Company has a strong marketing and distribution network. The
Company has its registered office in Mumbai and has 122 branches, 72
service centres, 24 camp locations, 8 regional processing units and 4
central processing units in India, spread across the length and breadth
of India. Additionally, your Company has international representative
offices located in London and Dubai to cater to the needs of
non-resident Indians. Your Company has entered into strategic housing
loan distribution and syndication arrangements with public and private
sector banks, including Punjab & Sind Bank to cater to the northern
India, United Bank of India for eastern India, Central Bank of India
for central India and Yes Bank Limited for across India. This gives us
wider reach and access to the Banks'' network, where both are set to
gain. Our strong network coverage is designed to provide increased
penetration to cater to the evolving needs of our existing customer
base and tapping a growing potential customer base throughout India.
The Investment Committee constituted by the Board of Directors is
responsible for approving investments in line with limits as set out by
the board. The decisions to buy and sell upto the approved limit
delegated by the board are taken by the Chairman &
Managing Director, who is assisted by two Senior Executives i.e. Sr. GM
Account & Taxation and GM (Finance & Resources). The investment
function is carried out primarily to support the core business of
housing finance to ensure adequate levels of liquidity and to maintain
investment in approved securities in respect of public deposits raised
as per the norms of NHB.
Considering the time lag between raising of resources and its
deployment, the surplus funds are generally being parked with liquid
fund schemes of mutual funds and short term deposits with banks.
During the year, your Company earned Rs. 1.82 crore by way of Income from
Mutual funds and Rs. 13.56 crore by way of interest on deposits placed
with banks. At the end of the year, your Company maintained Rs. 358.41
crore by way of deposits with banks.
As per NHB guidelines, HFCs are required to maintain Statutory Liquid
Ratio (SLR) in respect of public deposits raised. Currently the SLR
requirement is 12.50% of the public deposits. As at 31st March, 2012,
your company has invested Rs. 48.48 crore in approved securities
comprising of government securities, government guaranteed bonds and by
way of Bank Deposits for Rs. 47.18 crore. It is maintained within the
limits prescribed by NHB.
INSURANCE OF PROPERTY
Your Company has insured its various properties and facilities against
the risk of fire, theft, etc., so that financials are not impacted in
the unfortunate even of such incidents.
The employees of the Company are covered under the mediclaim facility
DIRECTOR''S AND OFFICER LIABILITIES
This policy covers the Director''s and officer of the Company against
the risk of third party actions arising out of their actions
/directions which may have resulted in financial loss to any third
party. The Company has appropriately insured itself to mitigate against
such risk from any third party.
INSURANCE COVERAGE TO BORROWERS
All the borrowers of the Company were insured against the risk of
accidental death, property insurance and loss of employment (upto 3
EMI''s) by Future Generali General Insurance Co. Ltd.
Your Company is a Group Administrator (Master Policy Holder) of ''Home
Assure'' a life insurance mortgage reducing term assurance product from
ICICI Prudential Life Insurance Co. Ltd, whereby the borrowers are
insured for the outstanding loan amount in the event of occurrence of
death during the loan tenure.
In addition your Company also offered ''Home Safe Plus'' a general
insurance product from ICICI Lombard General Insurance Co. Ltd to
borrowers availed loan against property to insure against accidental
death, property insurance, critical illness and loss of employment (up
to 3 EMI''s).
The primary objective is to insure our loan portfolio from default due
to unforeseen events with our borrowers. Your Company has insured 96%
of all the new customer acquisitions and 81% of the total loan
portfolio acquired in FY 2010-11. The overall fee income growth in FY
2011-12 was 52% over last FY 2010-11.
The Company has been following the various Circulars, Notifications and
Guidelines issued by National Housing Bank (NHB) from time to time. The
Circulars and the Notifications issued by NHB are also placed before
the Audit Committee / Board at regular intervals along with the
compliance of the same.
During the year under review, NHB has conducted an inspection of the
Company under Section 34 of the NHB Act, 1987 and Company has furnished
the replies to the same.
KYC & AML STANDARDS
During the year under review, the National Housing Bank has issued
revised comprehensive Know Your Customer (KYC) Guidelines and Anti
Money Laundering Standards in the context of recommendations made by
the Financial Action Task Force on Anti Money Laundering Standards and
on Combating Financing of Terrorism Standards. During the year, the
Board reviewed and noted the amendments to the Company''s KYC and
Prevention of Money Laundering Policy as stipulated by NHB. Your
Company has adhered to the compliance requirements in terms of the said
policy for monitoring and reporting cash/ suspicious transactions.
The Fair Practices Code framed by NHB seeks to promote good and fair
practices by setting minimum standards in dealing with customers,
increase transparency so that customers have a better understanding of
what services they can reasonably, encourage market forces through
competition to achieve higher operating standards, promote fair and
cordial relationships between customers and the housing finance company
and foster confidence in the housing finance system. During the year,
your Company has adhered to the Fair Practices Code as approved by the
Board of Directors.
CODE OF CONDUCT:
Your Company has adopted a revised Code of Conduct for its Board
Members and Senior Management personnel. The code of conduct has also
been posted on the official website of the Company. A copy of the code
of conduct has been circulated to the directors and senior Management.
The Declaration by the Chairman & Managing Director of the Company
regarding compliance with the Code of Conduct for Board Members and
Senior Management is annexed with the Corporate Governance report.
RISK MANAGEMENT FRAMEWORK:
Your Company has a Risk Management Framework, which provides the
mechanism for risk assessment and mitigation. The ALCO Management
Committee (AMC) comprises the Chairman & Managing Director, the Chief
Executive Officer, Chief Operating Officer and other members of senior
During the year, the AMC reviewed the risks associated with the
business of your Company, its root causes and the efficacy of the
measures taken to mitigate the same. The Board of Directors also
reviewed the key risks associated with the business of your Company,
the procedures adopted to assess the risks and their mitigation
We believe that the ''DHFL'' brand is one of the most important
intangible assets that we own. During this fiscal year, the Company
remained resolutely committed to building its brands for the long term
and continues to invest in their marketing, sales and distribution in
all key markets, such as:
- Brand Campaign: Brand commercial did the aerial carpet bombing during
October – November 2011 with 8971 spots across 47 Regional General
Entertainment Channels and Business & News Channels and created high
brand salience at a blanket level across all markets. This was also
supported by high visibility Print Innovations in key select markets.
- Sustenance Campaign: A well designed Print Media plan sustaining for
almost 16 weeks starting 17th August carried rational product based
communication with creative variations comprising home loan messages of
generic, occupational, clear product descriptive, festive based
communication and fixed deposits in 27 regional dailies to reach out
129 plus DHFL operating locations through a cumulative of 400 plus
- Corporate Campaign: The campaign focused at delivering the Brand
Essence to the Corporate Audience which involved Key decision makers,
Investor Pools etc. The campaign was activated between Nov – Dec 2011
involving high visibility media chosen basis the desired TG. TVC: Over
3000 spots were consumed across key business & news Channels like ET
Now, CNBC, BBC World, Bloomberg among others. This was further
supported through 39 highly targeted insertions in over 13 Business
Magazines like Business World, The Economist, Business Today, Forbes,
and Outlook etc. While the Online design covered most prominent online
portals catering to the news & business affluent audience like
Bloomberg, Money control, Reuters etc delivering 2,54,67,662
- Retail Activations: Retail level marketing programs gained a lot of
prominence this year. Over 33 trade fairs were participated across the
year. 40 Business Associate Meets conducted for alternate referral
channel development. DHFL Express a unique activation program conducted
across zones in Mumbai, Pune & Rest of Maharashtra, Delhi, Rajasthan,
Kerala & Karnataka generating over 6000 enquiries. These events
cumulatively supported in delivering disbursements of 603 files worth Rs.
- Online: This year saw the DHFL website migrating to the Wordpress
platform thereby easing out the content management aspect as well as
enhancing the auto optimization for Search Engine Optimization (SEO)
which is key in today''s digital marketing space. DHFL also went active
on the Mobile space through the launch of its Mobile site, which today
enjoys a 300% growth in traffic. The platform generated over 18000
- Sports: Your Company is the associate team Sponsor for Mumbai Indians
the most followed franchisee of the Indian Premier League (IPL)
DHFL had over a million visits to our website www.dhfl.com on business
and property related topics during the year. We continued to have
leadership presence at premier housing finance industry and real estate
Awards & Recognition
During this fiscal year, your Company has received the following Awards
and Recognition, by the various bodies in recognition of Company''s
operation and conduct of business, which has made us proud:
- DHFL was awarded the Powerbrand status for the 2nd year
consecutively. This is recognition by the Indian Consumer who has
chosen DHFL as a Powerbrand, indicating a high degree of brand
satisfaction across performance parameters.
- DHFL was ranked 337th amongst the top Fortune India 500 companies for
the year 2011-12.
- Ranked as 47th amongst India''s'' 50 Biggest Financial Companies for
the year by Business World Magazine.
- DHFL won Marketer of Year – Realty Plus Excellence Awards of the Year
- DHFL won Greentech HR Excellence Award – 2012 for Best Strategy (Gold
- DHFL Wins Realty Plus Newsmaker of the Year-2011.
- DHFL become Life time corporate member of with The Indian Institution
of Valuers (India).
Shri Kapil Wadhawan - Chairman & Managing Director received the Top
Honour, as the undisputed, unanimous choice, for the POWERBRANDS HALL
OF FAME CORPORATE ICON OF THE YEAR 2011 – 2012. The PowerBrands Hall of
Fame seeks to honour leaders in the business fraternity who have carved
a niche for themselves with their remarkable strategies that have
channelized growth and been instrumental in taking their companies
All these accolades are a reflection of DHFL''s consistency when it
comes to delivering shareholder value and speaks volumes about it being
customer- centric and service driven.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Considering these, the concept of Corporate Social Responsibility (CSR)
is the demand of the current era. CSR has become a concept that
frequently overlaps similar approaches, such as corporate
sustainability, corporate sustainable development and corporate
To meet CSR, your Company along with the International Finance
Corporation (IFC), a member of the World Bank Group, and DHFL Vysya
Housing Finance Ltd., established Aadhar Housing Finance Private
Limited (AHFPL) in May 2010 to meet the needs of the under-served lower
income segment of society with focus and technical expertise. AHFPL
primarily targets states with a relatively larger lower income segment
such as Uttar Pradesh, Madhya Pradesh, Jharkhand, Orissa, Chhattisgarh
and Bihar. The ticket size of loans to be originated will be limited
to a maximum of Rs. 6 lakh.
Your Company is a socially responsible organization and always keen to
promote the interest of customers, employees, shareholders and
communities as a whole. Your Company has upheld its CSR in the
Our founder chairman''s vision and legacy continues to guide our company
and our people. Social responsibility is a way of life at DHFL. It
means investing in and enriching our communities. It means encouraging
CSR was the main focus this year which received overwhelming
participation and was a huge success.
To commemorate our heroes on this year''s Independence Day, DHFL
organized a blood donation drive in association with the Red Cross
Society of India on the 12th August, 2011. The event was received with
eager participation from the DHFL family.
Joy of Giving:
Employees came forward to celebrate the Joy of Giving by donating
newspapers, magazines etc. DHFL supported Umang Foundation''s
initiative of supporting stationary kits to 300 underprivileged
children in the Joy of Giving week.
Children''s Day and Toy Donation Drive:
This Children''s Day, DHFL conducted a Toy Donation Drive in association
with Mumbai Mobile Crèches (MMC). The participation was quite
enthusiastic and we managed to collect 5 large cartons of toys. DHFL
volunteers also visited the Sion centre of MMC spent some time with the
children and handed over the toys. A printer, 2 desktops and
stationary for the kids were donated on the occasion.
DHFL Touches Lives Of Children Through Balakalakaar
DHFL was the title sponsor of AIESEC Mumbai''s Balakalakaar.
Balakalakaar 2011 saw a 1000 children from 10 BMC schools participate
in a month long program involving a series of workshops. Based on their
performance, 100 children were shortlisted to showcase their talents
and receive scholarships at the DHFL Balakalakaar Grand Finale 2011
event held in December 2011.
Eye Donation Campaign:
Employees of DHFL vowed to pass the gift of sight and pledged to donate
their eyes facilitated by Umang Donation, a NGO committed to social
1. DHFL, as an equal opportunity employer, celebrated the
International Women''s Day. All women employees were recognized with
chocolates and a card.
2. Regional festivals like Navratri, Onam, Christmas etc are
celebrated with great fervor thus promoting a cohesive environment.
Your Company in association with Mumbai Mobile Crèches participated in
Standard Chartered Mumbai Marathon - 2012 on 15th January, 2012. Your
Company had taken initiatives to help support the cause of children of
construction workers at the construction sites in Mumbai.
In line of agreement with Concern India Foundation (CIF), based in
Mumbai, your Company continues to support for promoting activities
linked to upliftment of members belonging to weaker sections of
society. Concern India Foundation is undertaking the activities linked
to the following major issues:
- Community Development
DHFL Employee Welfare Trust
Your Company also provides assistance for education to its employees
who aspire to undertake education through its trust Late Shri Rajesh
Kumar Wadhawan DHFL Employees Welfare Trust.
Secretarial Audit is being carried out at the specified period, by
practicing company secretary. As a measure of good corporate governance
the Company had also appointed M/s. Aabid & Co, practicing company
secretaries to conduct Secretarial Audit of the Company. The
Secretarial Audit Report for the Financial Year ended 31st March, 2012
is provided in this Annual Report.
During the year the Company managed to attract talent from leading
banks, financial institutions and multinational organizations.
Your Company is fully operational with its globally renowned HRIS
Peoplesoft package for its HR systems and processes.
Your Company believes that the ability to keep learning is a key
sustainable advantage and hence strong emphasis is placed on constantly
upgrading the skills of its employees. During the year, all new
recruits underwent an induction training programme. In addition,
employees who were promoted across various grades attended Executive
Development and Managerial Skills programmes. During the year, a
leadership programme was designed and conducted by the Indian Institute
of Management, Ahmedabad, for a select group of employees identified on
the basis of their performance and future potential.
Amongst many others, internal training programmes were conducted in the
areas of housing finance, corporate risk management; negotiate selling
skills, credit risk management KYC and AML measures. Your Company also
nominated staff members for a variety of external programmes including
real estate and housing, education, treasury and risk management,
information technology, taxation and International Financial Reporting
Measures were taken to reach out to the employees through revised
incentive schemes, several reward and recognition programs and employee
engagement activities. A complete On-Boarding process including the
Buddy program was put in place to ensure that new employees feel at
ease in the initial period of joining.
During the year, the Company monitored more closely the individual
performances, month on month and the weak performers were put through a
structured Performance Improvement Plan (PIP).
The work force of the Company as on 31st March 2012 was 1,400. The
total work force cost during the year has gone up by 44.70% from Rs.
59.86 crore to Rs. 87.81 crore. This was mainly due to increase in work
force to meet the requirements on account of significant expansion in
terms of geographical growth as well as business volumes and the salary
revisions effected during the year.
During the year, the Company received an award for The Best Strategy
Gold Award by Greentech
Foundation as part of their HR Excellence Award, 2012. The HR- Head
received the HR Leader Gold Award, 2012 given by the same foundation.
The change management and transformation process including the scaling
up of HR operations to meet the company''s dynamic needs, have
contributed in no small measure to the robust growth of the company.
Your Company has entered into Deed of Trust with Life Insurance
Corporation of India which covers the Company''s employees under the
group gratuity schemes with the Life Insurance Corporation of India
(''LIC''). The schemes are defined benefit schemes and are funded in line
with the LIC''s actuarial valuation carried out at year end.
PARTICULARS OF EMPLOYEES
In accordance with the provisions of Section 217(2A) of the Companies
Act, 1956 and the rules framed thereunder, the names and other
particulars of employees are set out in the annexure to the Directors''
Report. In terms of the provisions of Section 219(1)(b)(iv) of the
Companies Act, 1956 the Director Report is being sent to all the
shareholders of the Company excluding the annex. Any shareholder
interested in obtaining a copy of the said annex may write to the
EMPLOYEES STOCK OPTION SCHEME (ESOS)
Employees Stock Option Scheme (ESOS) was approved and implemented by
the Company and Options were granted from time to time to employees
under ESOS 2008 and ESOS 2009 - Plan I & II in accordance with the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines, 1999 (''''the SEBI
INFORMATION TECHNOLOGY AND COMMUNICATIONS
During the year 2011-12, apart from upgrading the existing software
applications with enhanced/ added features to meet the current and
emerging business needs, certain new application systems were
Your Company has launched the customer portal in the financial year
2011-12 where the customers can view their loan account details
on-line. This facility is primarily created to enable the customer to
view the loan details at their convenience. This will also reduce the
customer visit to the branches, which in turn will help to gradually
reduce the manpower required at the branches to service the customer.
Currently, we have enabled this facility for the post disbursement
process, in the second phase we are planning to enable this facility to
customers whose application has been logged into the system where they
will be able to track the application status. We will initiate various
activities with the help of marketing team to educate and make the
customers aware of this facility so that we have more number of
customer registrations in the customer portal.
AMALGAMATION OF FIRST BLUE HOME FINANCE LTD AND DHFL HOLDINGS PRIVATE
LTD. WITH YOUR COMPANY
The Board of Directors of your Company at its meeting held on 28th
September, 2011 had, approved amalgamation of First Blue Home Finance
Limited and DHFL Holdings Private Limited with your Company in terms of
a Scheme of Amalgamation (the Scheme) under Sections 391 to 394 of
the Companies Act, 1956. The Board had approved the share swap ratio of
10:97, meaning thereby 10 (Ten) equity shares of Rs. 10/- each fully
paid-up in your Company for every 97 (Ninety Seven) equity shares of Rs.
10/- each fully paid-up in First Blue Home Finance Ltd. Said swap ratio
is based upon the report submitted by M/s. Ernst & Young and the
fairness opinion of the same had been confirmed by Standard Chartered
Bank, an independent merchant banker. The Appointed Date of the
amalgamation was April 1, 2011.
The aforesaid Scheme of Amalgamation of First Blue Home Finance Ltd and
DHFL Holdings Private Ltd into and with your Company was approved by
equity shareholders of your Company with requisite majority at the
meeting held on 17th April, 2012. Subsequently, your Company filed the
petition before the Hon''ble High Court at Bombay.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any members of the Company who may be
interested in obtaining the same. The annual accounts of the subsidiary
companies will also be kept open to inspection at the Registered Office
of the Company and that of the respective subsidiary companies. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiary companies. The same will also be
hosted on our website, www.dhfl.com.
During the year under review your Company disinvested majority of its
equity shareholdings in DHFL Vysya Housing Finance Ltd and DHFL
Property Services Ltd to the existing promoters / promoter group of
your Company. Disinvestment of equity shares in DHFL Vysya Housing
Finance Ltd. was to compliance with NHB requirement.
In view of the aforesaid disinvestment, the shareholding of your
Company, in DHFL Vysya Housing Finance Ltd is below 10% of the total
paid up equity capital of the DHFL Vysya Housing Finance Ltd and has
ceased to be subsidiary of your Company and your Company does not hold
any equity stake in DHFL Property Services Ltd.
Accordingly, Aadhar Housing Finance Private Ltd, which was promoted by
your Company also ceases to be subsidiary of your Company due to
disinvestment of Company''s equity in DHFL Vysya Housing Finance Ltd.
Due to aforesaid disinvestment, DHFL Vysya Housing Finance Ltd, DHFL
Property Services Ltd and Aadhar Housing Finance Private Ltd. have
ceased to be subsidiaries. However, the said companies shall continue
to be Associate/Group Companies of your Company.
Your Company has 3 subsidiaries, namely, First Blue Home Finance Ltd,
First Blue Financial Consultants Ltd. and DHFL Holdings Private Ltd.
CONSOLIDATION OF ACCOUNTS
The audited Consolidated Accounts and Cash Flow Statement, comprising
of DHFL and its subsidiary, First Blue Homes Finance Ltd. First Blue
Financial Consultants Ltd and DHFL Holdings Private Ltd. are annexed to
this Annual Report. The Auditors'' Report on the Consolidated Accounts
is also attached. The Consolidated Accounts have been prepared in
accordance with the Accounting Standards prescribed by the Institute of
Chartered Accountants of India in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO
The particulars regarding foreign exchange earnings and expenditure
appear as Note No. 31.1 in the Notes forming part of the financial
statement for the year ended 31st March, 2012.
Since the Company is not engaged in any manufacturing activity, the
other particulars relating to conservation of energy and technology
absorption as stipulated in the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 are not applicable.
In accordance with the provisions of the Companies Act, 1956 read with
the Clause 158 of the Articles of Association of the Company, Shri
Dheeraj Wadhawan and Dr. P. S. Pasricha, directors of your Company
retire by rotation and being eligible; offer themselves for re-
appointment at the ensuing Annual General Meeting. Necessary
resolutions for the re- appointment of the aforesaid directors have
been included in the notice convening the ensuing AGM.
Brief resume of the Directors proposed to be appointed / re-appointed,
nature of their expertise in specific functional areas and names of
companies in which they hold directorship and membership / chairmanship
of Board committees, as stipulated under Clause 49 of Listing Agreement
with the Stock Exchanges, are provided in the Report on Corporate
Governance forming part of the Annual Report. All the directors of the
Company have confirmed that they are not disqualified for being
appointed/ reappointed as directors in term of Section 274(1)(g) of the
Companies Act, 1956.
Your Company has a well equipped internal audit department carrying out
a regular independent evaluation of various activities undertaken by
your Company through its branches, Zonal Offices and Corporate Office.
The Internal Audit Department is headed by senior management personnel.
The audit function maintains its independence and objectivity while
carrying out assignments. It evaluates on a continuous basis, the
adequacy and effectiveness of internal control mechanism, adherence to
policies, procedures as well as regulatory and legal requirements. The
function also proactively recommends improvement in operational
processes and suggests streamlining of controls against various risks.
The Audit Committee of the Board reviews the performance of the
internal audit on continuous basis, gives direction to its
functionaries and reviews effectiveness of internal control systems.
In addition to internal audit, concurrent audit is conducted on monthly
basis by engaging 22 independence practicing Chartered Accountant Firms
in most of our branches covering major volume of our business. Focus of
concurrent audit is mainly on transaction level adherence to policies,
procedures and guidelines issued by management and compliance to
regulatory and statutory guidelines.
Systems and procedures are being upgraded to provide checks and alerts
for avoiding/detecting fraud arising out of misrepresentation by
borrower/s while availing the housing loans.
M/s. B.M. Chaturvedi & Co., Mumbai, Chartered Accountant [Firm
Registration No.114317W], retire at the ensuing Annual General Meeting
and being eligible, offer themselves for re-appointment. M/s. B.M.
Chaturvedi & Co., have confirmed that if reappointed, it shall be
within the limits of Section 224 (1B) of the Companies Act, 1956. The
necessary eligibility certificate under Section 224(1B) of the
Companies Act, 1956, was received from them. The Audit Committee and
Board of Directors recommend the appointment of M/s. B.M. Chaturvedi &
Co., Chartered Accountants, as the auditors of your Company.
The notes to the accounts referred to in Auditors Report are
self-explanatory and therefore do not call for any further comments.
DIRECTORS'' RESPONSIBILITY STATEMENT
Your Directors would like to inform that the audited accounts
containing the Financial Statement for the year ended 31st March 2012
are in conformity with the requirements of the Companies Act, 1956 and
they believe that the financial statements reflect fairly the form and
substance of transactions carried out during the year and reasonably
present the Company''s financial condition and results of operations.
These Financial Statements are audited by the Statutory Auditors, M/s.
B. M. Chaturvedi & Co., Chartered Accountants, Mumbai.
In accordance with the provisions of section 217 (2AA) of the Companies
Act, 1956 and based on the information provided by the management, your
directors state that:
(i) in the preparation of accounts, the applicable accounting standards
have been followed;
(ii) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as at 31st March, 2012 and of the profit of the Company for
year ended on date;
(iii) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities and
(iv) they have prepared the annual accounts on a going concern basis.
Your Company has complied with the provisions of Corporate Governance
as under the amended Listing Agreements of the Stock Exchanges, with
which the Company''s shares are listed. Pursuant to Clause 49 of the
Listing Agreements with the Stock Exchanges, the followings form part
of this Annual Report :
(i) Chairman & Managing Director''s declaration regarding compliance of
Code of Conduct by Board Members and Senior Management personnel;
(ii) Management Discussion & Analysis
(iii) Report on the Corporate Governance;
(iv) Auditors'' Certificate regarding compliance of conditions of
Housing / real estate sector which is slowly coming out of the mid 2008
slump has received good support from Union Budget 2012- 2013. How the
budget has encouraged housing sector finance is given below:
- Existing scheme of interest subvention of 1 per cent on housing loan
- Existing housing loan limit enhanced to Rs. 25 lakh under priority
- Limit of indirect finance under priority sector to housing loan
enhance to Rs. 10 lakh from Rs. 5 lakh
- Allowing External Commercial Borrowings (ECB) for low cost affordable
housing projects across major cities and towns and
- Setting up of a Credit Guarantee Trust Fund to ensure improved flow
of institutional credit for housing loans.
With the recent improvement in the demand for housing and real estate
sectors, activities in the housing, real estate sectors and
infrastructure sectors are expected to remain healthy in the coming
quarters. This will lead to a rise in credit demand for housing. The
liquidity conditions of your Company have remained comfortable during
the year. Your Company has successfully raised funds from bank as well
as non bank sources. Your Company does not expect any pressure on the
liquidity front. This is because liquidity conditions in the banking
system will continue to remain comfortable. A healthy demand for credit
for home loan coupled with comfortable liquidity conditions will lead
to a rise in disbursement.
Your Directors wish to place on record their gratitude to the National
Housing Bank, the Company''s Customers, Bankers, Shareholders, Debenture
holders, Depositors and others for their assistance and co-operation
and who have helped the Company in its endeavour. The Board also places
on record its deep appreciation for the excellent support received from
the employees at all levels during the year. The Directors also like to
thank the Bombay Stock Exchange, the National Stock Exchange, NSDL,
CDSL and the Credit Rating Agencies for their co-operation.
for and on behalf of the Board
Chairman & Managing Director
Dated : 10th May, 2012
Place : Mumbai