report on coprorate governance 06-07

8/12/2019 Report on Coprorate Governance 06-07

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Annual Report 2006-07 DHFL Changing Rules. ChangingLives

REPORT ON CORPORATE GOVERNANCE

Companys philosophy on Code of Governance

The Company considers the compliance with Corporate

Governance as a process towards establishing and maintaining the

principles of integrity, transparency, accountability and fairness and

not a mere adherence to a regulatory framework. The Company has

always practiced Corporate Governance on a voluntary basis rather

thanas an obligation. TheCompanyon a continuousbasis assesses

itsstrengths and weaknesses so as to achieve thebeststandards of

Corporate Governance while on the path of protecting the long terminterest of the shareholders, customers, depositors, creditors and

employees. The Company is conscious of the reputation it carries

amongst its customers and public at large and is continuously

striving to provide good management, to adopt prudent risk

management techniques and to comply with the requiredstandards

of capital adequacy. The Company has implemented the principles

of Corporate Governance in allits dealingsand activitiesandit is fully

supported and endorsed by all the Directors and senior

management personnel so as to sustain a cooperative, competent,

positive, harmonious and productive work atmosphere and

businessorganization.

(Pursuant to Clause 49 of theListing Agreement)

Corporate Governance, has assumed remarkable importance for all the corporate players in India as well as abroad. The Organization for

Economic Co-operation and Development (OECD) hasissued a revisedsetof Corporate Governance Principleswhich areadaptable tovarying

social, legal and economic frameworks in different countries and are considered as widely acceptable global benchmarks of Corporate

Governance. Companies all over theworldhave realized thata vigorous quest of good governance is crucialfor enduringsuccess.

N. R. NarayanaMurthyCommittee on Corporate Governance constitutedby SEBI has observed that, CorporateGovernance is theacceptance

by management of the inalienable rights of the shareholders as the true owners of the corporation and of their own role as trustees on behalf of

the shareholders. It is about commitment to values, about ethical business conduct and about making a distinction between personal and

corporatefunds in themanagementof theCompany.

Companieshave now become conscious of the importanceof pursuinggood Corporate Governance for reaping rich benefits for the Company

and its stakeholders. Corporate Governance is no longer a rigid set of guidelines; it has now become an integral part of the companies

functioning and progress.

The detailed report on Corporate Governance for the financial year ended 31st March, 2007, as per the format prescribed by SEBI and

incorporated inClause49 ofthe Listing Agreementis setout below:

The Board of Directors

Directors of DHFL possess high degree of professional ethics,

integrity and values and are committed to representing the long term

interest of the stakeholders. The basic responsibility of the Board is

to provide effective governance over the Companys affairs

exercising its reasonable business judgment on behalf of the

Company. The Companys business is conducted by its employees

under the direction of the Vice Chairman & Managing Director and

Chief Operating Officer (COO) and the overall supervision of the

Board, to enhance the long term value of the Company for its

stakeholders. Inorder toensureeffectiveness of theBoard,various

powersand responsibilities have been delegatedto the Committees

of theBoardofDirectors.

DHFLs commitment to ethical and lawful business conduct is a

fundamental shared value of the Board of Directors, the Senior

Management and all other employees of the Company. Consistent

with its values and belief, the Company has formulated a

Code of Conduct applicable to the Board and Senior Management.

Further the Company has also adopted code for prevention of

insidertrading.

Composition and size of the Board

As on 31st March, 2007, the Board of Directors comprised of eight

members, including seven non-executive Directors and a Whole-

time Managing Director. The Managing Director is theonly executive

Director on the Board. The goal has been to achieve an optimum

combination of Executive and Non-Executive Directors as well as

independent directors so that the Board is cohesive and has the

expertise for quick and informed decision making. As the Chairman

of the Board is non-executive, the criterion of one-third of the Board

consisting of independent Directors is fulfilled. The Members of

theBoardof Directors aredrawn fromdiverse fields,such as finance,

banking,insurance, administration and economics. Outof thesevennon-executive Directors, five are independent Directors. The

Directors are elected based on their qualification, experience in

varied fields as well as the Companys business needs. Shri Rakesh

Kumar Wadhawan is the Chairman of the Board and Shri Kapil

Wadhawan is the Vice Chairman and Managing Director.

Considering the consistent efforts of Shri Kapil Wadhawan in

transforming DHFL into one of the most influential housing finance

institutions in India, he has been re-designated as Vice-Chairman

andManagingDirectorw.e.f. 25th January, 2007.

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Board Meetings and Attendance

TheBoardof Directors meets atleastoncea quarterto take on record

and approve quarterly/annual financial results and to review the

compliance reports prepared by the Company. Additional meetings

are held asand whennecessary. The Company Secretary prepares

the agenda for the meetings in consultation with the Chairman and

Vice Chairman & Managing Director. The agenda, managementreport and other explanatory notes along withthe performanceof the

subsidiary company are circulated to the directors in advance of the

Board meetings. The members of the Board have full access to the

information and recordsof theCompanyand are free to recommend

any matter for inclusion in the agenda. The senior executives of the

Company are also invited to the Board Meetings for their additional

inputs as when required. A representative of Caledonia Investments

Plc is also invited to attend the Board Meetings as an Investor

Observer.

All the significant activities and transactions of the Company are

regularly notified and reported to the Board. The minutes of all the

CommitteemeetingsarealsoplacedduringeveryBoardMeeting.The

Board is also provided other information as required by the l isting

requirements. An Action Taken Report (ATR) signifying the

compliancesof thedecisions taken intheearlier BoardMeetingbythe

Board is placed at every Board meetingwhich provides the Board an

opportunitytoreviewdecisions/agendaitemsconsideredearlier.

During the year ended 31st March, 2007, the Board met four times.

The meetings were held on 15th May, 2006, 17th July, 2006, 19th

October, 2006and 25th January, 2007.

The attendance of theDirectors in the Board Meetings heldduring

the financial year along with the attendance in the Annual General

Meeting heldon 17th July, 2006is given as follows:

Name of Director Category Number of Attendance at thelast AGM held onBoard meetings

attended 17th July, 2006

Shri Rakesh Kumar Wadhawan Non-Executive 3 No

Shri Kapil Wadhawan Executive Director 4 Yes

Shri Sarang Wadhawan

Shri R.P. Khosla Non-Executive 3 Yes

Shri G. P. Kohli Non-Executive 4 Yes

Shri R. S. Hugar Non-Executive 3 Yes

Shri Ashok Kumar Gupta Non-Executive 4 Yes

Shri Waryam Singh Non-Executive 3 No

Chairman

Vice Chairman & Managing Director

Non-Executive 4 Yes

Directorships&CommitteePositionsheldbytheDirectors

In accordance with the Clause 49 of the Listing Agreement, none of

the Directors is a member inmorethan10 Committees oris acting as

a Chairman of more than 5 Committees across companies in which

he is theDirector. It is to be noted thatClause49 excludes theprivate

limited companies, foreign companies and companies under

Section 25 of the Companies Act, 1956 for the purpose

of considering the limits of the Committees. Also, only the

Chairmanship and membership of the Audit Committee and

ShareholdersGrievances Committee are considered.

The directorships and Committee positions held by the Directors

invarious Companiesaregivenasfollows:

Name of Director Category Number of Directorship No. of CommitteeDirectorship in other companies position held in

other Companies(excluding Directorships inforeign and private companies)

1

Shri Kapil Wadhawan 4

Shri R.P. Khosla Non-Executive 1 - 1

Shri G. P. Kohli Non-Executive 2 1 1

Shri R. S. Hugar Non-Executive 2 1

Shri Ashok Kumar Gupta Non-Executive 3 - 2

6

Shri Waryam Singh Non-Executive 3 1 -

Shri Rakesh Kumar Wadhawan Chairman 4

Vice Chairman & - 1

Managing Director

Shri Sarang Wadhawan Non-Executive - 2

Chairman Member

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Annual Report 2006-07 DHFL Changing Rules. Changing Lives

Board Committees

As the Board consists of individuals of highly diverse backgrounds

and experience, it is not prudent for the full Board to meet on all

occasions. For this reason, the Company has formed various

Committees of the Board of Directors comprising of Directors with

the appropriate expertise and each Committee is assigned with a

separate specialized task. The formation of the Committees does

away with the necessity of calling a meeting of the full Board at

short intervals. This results in the comprehensive analysis of the

specialized functions by the Committees and the Board can

substantially deliberate on other important items of the business

which demands its direct attention under the law. However, all the

minutesof theCommitteeMeetings are reportedto theBoard so that

allthe Board membersare awareof theCommittees activities.

The Company has four Committees of the Board - Audit

Committee, Remuneration and Compensation Committee,

Shareholders/Investors Grievance Committee and Finance

Committee. The constitution of the committees, appointment of the

members and delegation of the powers to the members of the

committees is decided by the Board. During every Board Meeting,

minutes of all the Committee Meetings held between the two Board

Meetings areplacedfor theperusal of theBoardmembers.

Audit Committee

(a) Termsof Reference

The Audit Committee of the Company is formed primarily to monitor

and supervise the Companys financial reporting process and to

ensure that the disclosure of the financial information is correct,

sufficient and credible in accordance with the provisions of the

Listing Agreement and Section 292A of the Companies Act, 1956. In

addition to this function, the responsibilities of theBoard also include

butare notlimited to thefollowingfunctions:

To oversee the financial reporting process and disclosures of

financialinformation.

To review quarterly/ half yearly and annual financial statements

before submission to the Board with special emphasis on

accounting policies, compliance of Accounting Standards and

otherlegal requirementsrelatingto financialstatements.

To review the findings of the internal investigation and periodic

audit reports.

To hold discussions with the external auditors about the scope of

audit.

To recommend appointment/removal of statutory auditors and

fixingtheir remuneration.

To review all issues which are requiredto be reviewed by theauditcommittee pursuant to the listing agreement with the stock

exchanges and the Companies Act, 1956 with the management

and the internaland external auditors.

To review with the management the financial statements with

reference to anyrelated party transactions.

To review the observations of internal and statutory auditors in

relation to all areas of operation of the Company, including

internalcontrol systems.

To examineall taxation matters, includingrelated legal cases and

the Companys asset/liability managementstrategy (ALCO).

To review the findings of any internal investigation by the internal

auditors into matters where there is suspected fraud or

irregularity or a failure of internal control systems of a material

nature andreportingthe matter to theBoard.

To review with the management the financial statements of the

Subsidiary Companies.

To ensure the independence and objectivity of the independent

auditor.To ascertain the reasons for the defaults in the payment to the

depositors, debenture holders, shareholders and creditors.

Any other terms of reference as may be included from t ime to

timein Clause 49 ofListingAgreement.

The minutes of the meetings of the Committee are placed before

the Board for noting and are also circulated to the members of

theCommittee.

The Audit Committee comprises of three Directors- Shri R. S. Hugar

(Chairman), Shri G. P. Kohli and Shri Ashok Kumar Gupta as

members. All the three members of the Committee are independentdirectors. The members of the Committee have the necessary

expertise in accounting and financial management. The Company

Secretary acts as the Secretary to the Committee. Shri Kapil

Wadhawan, Vice-Chairman & Managing Director of the Company,

theStatutoryAuditors and theInternal Auditor/ Headof InternalAudit

of the Company are invited to attend the audit committee meetings.

The Chairman of the Audit Committee, Shri R. S. Hugar was present

at the Annual General Meeting held on 17th July, 2006 to answer the

queries of the shareholders.

Four meetings of the Audit Committee were held during the year-

on 15th May, 2006, 17th July, 2006, 19th October, 2006 and25th January, 2007. The Vice-Chairman & Managing Director,

Statutory auditors and Head of Internal Audit of the Company are

invitees to the meetings. They undertake the discussion and review

of the quarterly/half-yearly unaudited results, the annual audited

accounts, the annual internal audit plan, matters relating to the

compliance with accounting standards, auditors observations

arising from the audit of the Companys accounts and other related

matters. The attendance of the Directors in the Committee Meetings

isas follows:

(b) Composition

(c) Meetingsand the attendanceduring the year

15th May, 2006 Yes Yes Yes

17th July, 2006 Yes Yes Yes

19th Oct, 2006 Yes Yes Yes

25th Jan, 2007 No Yes Yes

Total Meetings 3 4 4

Attended

Shri R S Hugar Shri G P Kohli Shri Ashok

Kumar Gupta

Date ofMeeting

Attendance of Directors

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Meetings and the attendance during the year

The Finance Committee held 15 meetings during the year. The

attendanceof theDirectorsin the CommitteeMeetings is:


The Audit Committee comprises of three independent Directors

who have wide expertise in the field of finance and accounts. The

Committee met four times during the financial year to review the

quarterly results and the annual accounts of the Company.

The Committee reviewed the internal audit programs, financial

reportingsystems,relatedpartytransactionsrecordsandensuredthat

all the accounting transactions are in accordance with the prevailing

regulations. The Committee also reviewed the compliance of the

statements of accounts with accounting standards and Listing

Agreement with the relevant stock exchange. The Committee also

reviewed the accounts and performance of the subsidiary

company on a quarterly basis.

The Committee reviewed the observations made by the internal

and statutory auditors regarding the adequacy of operations

and procedure of internal control. The Committee has found no

discrepancy in the internal control system of the Company.

TheCommittee hasrecommendedto theBoardthereappointmentof

and audit feesto M/s B.M.Chaturvedi& Co.as theStatutoryAuditors

of the Company for the financial year 2007-08.

Report of the Audit Committee for the year ended31st March, 2007

Finance Committee

a) Composition

b) Terms ofReference

The terms of reference of the Finance Committee includes the

following:

Consequent upon the resignation of Shri M. S. Sundara Rajan, UBI

Nominee, the Finance Committee was reconstituted by the Board

of Directors at its meeting held on 15th May, 2006. The Committee

comprises of Shri Rakesh Kumar Wadhawan (Chairman of the

Committee),Shri Kapil Wadhawan and Shri G. P. Kohli.

1) To borrow funds for the purpose of the Companys business in

accordance with section 292 of the Companies Act, 1956 but

not exceeding the overalllimit upto which the Board of Directors

of the Company is authorized/to be authorized under section

293(1)(d) of theCompanies Act,1956.

2) To consider and approve/accept the letters of sanction by

the term lending institutions/banks/NHB and other bodiescorporate, openingand/or closing of the current accounts/cash

credit/overdraft/fixed deposits or other account(s) with any

bank and authorize the Directors/officers of the Company for

thesame.

3) To authorize operation of accounts of the Company with its

bankers and to vary the existing authorization to operate the

same and grantingof general /specific power of attorney to the

officers at the branches for routine matters and any such

matters pertaining to the routinefunctions.

4) To approve the change/s of rates of interest of all loan products

and on public deposits or on debentures, debts or any other

instruments/ financial productsissued by theCompany.

5) To considerand approve the allotment of any issue of securities

by the Company, be it by way of preference shares of all types,

public issue of equity shares including Rights Offer, preferential

issue of equity shares including firm allotment, employees

stock option plan/schemes, bonds, debentures and any other

financial instrument of like nature.

6) To grant approvals of loans upto Rs 30 crore to anyperson, firm

or body corporate at any time or from time to time subject to the

limitsprescribed under the HousingFinanceCompanies (NHB)

Directions, 2001, as maybeapplicable.

Date ofMeeting

Attendance of Directors

10th April 2006 Yes No Yes

22nd May, 2006 Yes No Yes

9th June, 2006 Yes No Yes

16th June, 2006 Yes No Yes

3rd July, 2006 Yes No Yes

24th July, 2006 Yes No Yes

23rd Aug, 2006 Yes No Yes

16th Sep, 2006 Yes No Yes

28th Sep, 2006 Yes No Yes

12th Oct, 2006 Yes No Yes

28th Nov, 2006 Yes Yes Yes

18th Dec, 2006 Yes Yes Yes

1st Mar, 2007 Yes Yes Yes

26th Mar, 2007 Yes No Yes

31st Mar, 2007 Yes No Yes

Total Meetings 15 3 15Attended

Shri Rakesh Shri KapilWadhawan

ShriGPKohliKumar Wadhawan

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Remuneration and Compensation Committee

Termsof reference

CompositionandMeetings

RemunerationPolicy

The terms of reference of the Remuneration and Compensation

Committee includes the recommendation of annual remuneration

and the periodic increments payable to the Executive Director(s)

which is further approved by the Board. The Committee is alsoempowered to recommend to the Board the appointment/

reappointment of the executive/ non-executive Directors, the

induction of Board members into various Committees. The

Committee alsoensures thatthe overallremuneration payable to the

Directors does not exceed the limits prescribed by the Companies

Act, 1956 and is within the limits approved by the shareholders.

The Remuneration Committee was renamed as Remuneration and

CompensationCommittee w.e.f.15th May, 2006 in accordance with

the SEBI (Employee Stock Option Scheme) Guidelines and was

entrusted with the following additionalresponsibilities:

1. Framingof theESOS Scheme

2. Administration of theScheme3. Exercise of controlover theimplementation of the Scheme.

4. Preparation of the Offer Document to disclose the various

detailsof theSchemeto theoption grantees.

5. Appointmentof intermediariesrequiredfor theScheme.

6. Anyother matter relating to administrationof the Scheme.

The Remuneration Committee consists of 3 independent directors

viz., ShriR. S. Hugar, Shri R. P. Khosla and Shri G. P. Kohli. During the

year ended 31st March, 2007, the committee met once on 17th July,

2006whichwas attended by allthe CommitteeMembers.

The compensation of the executive director comprises of a fixed

component and a performance incentive by way of commission.

The compensation is determined based on levels of responsibility

and scales prevailing in the industry. The commission is determined

based on certain pre-agreed performance parameters.

The executive director is not paid sitt ing fees for any

board/committee meetings attendedby him.

The compensation of the non-executive directors takes the form of

commission on profits. Though the shareholders have approved

payment of commission upto 1% of net profits of the Company for

each year calculated as per the provisions of the Companies Act,

1956, the actual commission paid to the directors is restrictedto a fixed sum. This sum is reviewed periodically taking into

consideration various factors such as performance of the Company,

time spent by the director for attending to the affairs and business of

the Company and the extent of responsibilities cast on directors

under general law and other relevant factors. Further, theaggregate

commission paid to all non-executives directors is well within

the limit of 1% of the net profits as approved by the shareholders.

The non-executive director is also paid sitting fees as permitted by

the governing regulations for every board/committee meeting

attended byhim.

The Company currently does not have any stock option

outstandings.

Details of remuneration of Directors for the year ended 31st March

2007are as follows:

Directors Remuneration & Sittings Fees

Shri Rakesh Kumar Wadhawan 1,42,857.00 1,85,000.00

Shri Kapil Wadhawan, 19,44,000.00 9,00,000.00 0.00

Shri R. P. Khosla 1,42,857.00 55,000.00

Shri G. P. Kohli 1,42,857.00 2,50,000.00

Shri R. S. Hugar 1,42,857.00 85,000.00

Shri Ashok Kumar Gupta 1,42,857.00 1,00,000.00

Shri Sarang Wadhawan 1,42,857.00 60,000.00

Shri Waryam Singh 1,42,857.00 65,000.00

Chairman

ViceChairman & Managing Director

Total 19,44,000.00 18,99,999.00 8,00,000.00

Name of Director Salary Commission Sit tings Fees

In accordance with the approval of the shareholders in the Annual

General Meeting held on 25th July, 2005, the Company has entered

into an agreement with the Managing Director for a period of five

years. A notice of atleast three months is required from either of the

party to the agreement for termination. As on 31st March, 2007,

the Company has not granted any Stock Options either to the

Vice-Chairman & Managing Director or to its employees.

Shareholders/ Investors Grievance Committee

Termsof reference

CompositionandMeetings

The Shareholders/ Investors Grievances Committee was

constituted in order to redress the complaints of the shareholders

and investors, related to transfer and transmission of shares, non-

receiptof annual reports,dividends and other share related matters.

The Committee also notes the requests to the Registrar and Share

Transfer Agent made by the shareholders relating to transfer,

transmission, consolidation, and replacement of share certificates,

issue of duplicate certificates and dematerialization of share

certificates. The Committee also reviews the certificates and reports

submitted to the Stock Exchanges under the Listing Agreement/

SEBIRegulations. TheCommittee alsoobserves the quarterly status

of the number of shares in physical as well as dematerialized form.

The Committee also reviews the periodicity and effectiveness of the

share transfer process, statutory certifications, depository related

issues andactivities of theRegistrarandTransferAgent.

The Committee consists of two members: Shri Waryam Singh, an

Independent Director (Chairman of the Committee) and Shri Kapil

Wadhawan, Vice Chairman & Managing Director as the member.

Shri S. Y. Sankhe,Company Secretary is theComplianceOfficer.

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Secretarial Audit

A qualified practicing Company Secretary carried out secretarial

audit of the Company on quarterly basis to reconcile the total

admitted capital with National Securities Depository Limited (NSDL)

and Central Depository Services India Limited (CDSL) and the total

issued and listed capital. The secretarial audit report confirms that

the total issued paid up capital is in agreement with the total number

of shares in physical form and the total number of dematerialized

shares held with NSDL andCDSLand the shares issued from timeto

time werelisted with theStockExchanges.

Risk Management

The Company has established risk assessment and minimization

procedures, which are reviewed by the Board and the Audit

Committee periodically. A detailed report on Risk Management is

included in the reporton ManagementDiscussion andAnalysis.

Code of Conduct

The Company has laid down a Code of Conduct for all Board

members and senior management of the Company. All the Board

members and management personnel have affirmed compliance

with the Code of Conduct. The Code of Conduct is posted on the

websiteof theCompanywww.dhfl.com.

Code for prevention of insider trading practices

In compliance with the Securities and Exchange Board of India

(Prohibition of Insider Trading) Regulations 1997, as amended

till date on Prohibition of Insider Trading, the Company has acomprehensive code of conduct and the same is being strictly

adhered to by its management, staff and relevant business

associates. The code expressly lays down the guidelines and the

procedures to be followed and disclosures to be made, while

dealing with shares of the Company and cautioning them on the

consequences on noncompliance thereof.

TheCompany followsquiet periods (closure of trading window)prior

to the publication of price sensitive information. During the period,

the Company has set up a mechanism where the management and

relevant staffand business associates of the Company are informed

about the sameand areadvisednot to deal in Companys securities.

The Company has formulated a code on Know Your Customer and

Anti-Money Laundering Standards in accordance with the

guidelinesissuedby National HousingBank. Thepolicylays down

Know Your Customer and Anti-MoneyLaundering Standards

Fair Practices Code

The Company has formulated a policy on Fair Practices Code in

accordance with the Guidelines on Fair Practices Code for Housing

Finance Companies (HFCs) issued by National Housing Bank

which is designed to assist both the Company and the consumer

and is applicable to all the products and services offered by the

Branches across the counter, over the phone, by post, through

interactiveelectronicdevices, on the internet orby any other method.The Code specifies various guidelines regarding the strategies

relating to marketing and advertising and to ensure disclosure

and transparency in dealing with the customers. The Code also

proposes the various tactics to be used by the Company during the

process of collection of dues and the various alternatives that are

available to the customers in case the customers are not satisfied

with theservices offered by theCompany.

Details of non-compliance by the Company

During the last three years, there were no strictures or penalties

imposed by either the Securities andExchange Board of India or the

Stock Exchange/s or any statutory authority for non compliance ofanymatterrelatedto thecapital markets.

Re-appointment of Directors

According to the Articles of Association, one-third of the Directors

are liable to retire every year and, if eligible, offer themselves for

re-appointment at every Annual General Meeting. Consequently,

Shri Waryam Singh and Shri G. P. Kohli would retire this year and

beingeligible, offerthemselves for re-appointment.

CEO/ CFO Certification

The CEO and CFO Certification of the financial statements and the

cash flow statement for the year is obtained and was placed before

theBaord.

40

the various guidelines which are to be complied by all the Branch

Managers, frontline staff and compliancestaff of the Company while

dealing with the existing as well as new customers. The Code also

specifies the importance of customer education and effective

training to the employees who deal with the customers. The staff is

alsorequiredto keep a vigilant lookon thetransactions of suspicious

nature and cash transactions exceeding the limits specified in the

Code. Shri S. Y. Sankhe, Company Secretary of the Company is

appointed as the Principal Officer to ensure the conformity and

compliance with the Guidelines. All the Branch Managers and other

related staff of the Company dealing with customers have affirmed


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Means of Communication

The main channel of communication with the shareholders is

through the Annual Report which includes Directors Report, Report

on Corporate Governance, Management Discussion and Analysis

and AuditedFinancial Results.

In order to ensure corporate disclosure and reporting requirements,the quarterly/half yearly/annual financial results are generally

published in widely circulated national and local dailies in The

Economic Times in Englishand in MaharashtraTimesin Marathi.

The Company also ensures effective interaction with the

shareholders at the Annual General Meeting. The Directors pay

special attention in answering the various queries raised by the

shareholdersat theAnnualGeneralMeeting.

As required by the Clause 51 of the Listing Agreement, the quarterly,

half-yearly and annual results, annual report and the shareholding

pattern of the Company are regularly filed through Electronic Data

Information Filing and Retrieval System (EDIFAR) of SEBI within the

time frame prescribed in this regard. The Company's results andofficial news release are also displayed on the Company's web site

and on the websites of The Stock Exchange, Mumbai and National

StockExchange.

Management Discussions and Analysis

A detailed report on Management Discussions and Analysis is

included in the Annual Report.

General Shareholders Information

Monday, 23rd July, 2007 at

1. Bombay Stock Exchange Ltd. Phiroze Jeejebhoy Towers

Dalal Street, Fort, Mumbai 400 001

Stock Code 511072

2. National Stock Exchange of India Ltd.

Exchange Plaza, Bandra Kurla Complex, Bandra East, Mumbai 400051.

Stock Code DEWANHOUS

INE-202B01012

Twenty - Third Annual General Meeting

Listing on Stock Exchanges

ISIN Number for NSDL & CDSL

12 Noon

M C Ghai Hall, Bhogilal Hargovidas Building, 2nd Floor,

18/20, Kaishushru Dubash Marg, Fort, Mumbai 400 001

1st of April to 31st MarchFirst Quarter - By last week of July

Second Quarter - By last week of October

Third Quarter - By last week of January

Results for the year - May/June

Monday 16th July, 2007 to Monday, 23rd July, 2007

(both days inclusive)

The final dividend if declared by the shareholders at the

Annual General Meeting shall be paid on or before

23rd August, 2007, i.e. within 30 days from the date of declaration.

Date, Time and Venue

Financial Reporting Calendar : 2007-08

Dates of Book Closure

Dividend Payment dates

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Non- Mandatory Requirements

Yes

The Company has constituted a Remuneration and Compensation

Committee, comprising of 3 independent directors, Shri R. P. Khosla,

Shri R. S. Hugar and Shri G. P. Kohli

a) Whether Chairman of the Board is entitled to

maintain a Chairmans office at the Companys

expenses and also allowed reimbursement of

expenses incurred in performance of his duties.

b) Remuneration and Compensation Committee

Market Price Data

The monthly high and low stock valuations along with the volume of shares traded at BSE and NSE are:

Period High Low Qty. Traded High Low Qty. Traded

April.06 80.00 64.00 4910617 82.65 60.00 5836093

May.06 96.00 63.00 28109116 95.90 63.00 37125487

Jun-06 101.80 53.00 35195795 101.80 53.15 52809060

Jul-06 69.45 51.00 5170277 69.35 51.00 7400787

Aug-06 71.00 57.00 5930788 71.20 57.25 8541341

Sep-06 88.45 61.85 27601192 88.50 61.80 48321935

Oct-06 83.85 71.50 6250028 83.85 71.70 10764417

Nov-06 83.70 67.50 7201330 84.00 67.25 11264565

Dec-06 80.90 71.10 3335439 80.75 71.50 3870069

Jan-07 88.50 75.30 6803375 88.40 75.30 9610551

Feb.07 88.95 63.00 4117710 89.00 66.35 5310991

Mar.07 73.50 59.00 795760 73.60 59.00 1038176

NSE-PriceBSE-Price

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Performance Comparison with BSE Sensex

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BSE

2006-07

Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07

DHFL

Sensex

Performance Comparison with NSE Index

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3500

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NSE

2006-07

Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07

DHFL

Index

4500

5000

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10/13


Distribution of Shareholding as on 31st March, 2007

Shares holdingof nominal Value

Rupees Number % to In Rupees % to TotalAmountTotal Nos

1 2 3 4 5

Upto 5,000 18959 88.3090 28867380 5.7590

5,001 to 10,000 1383 6.4420 11347400 2.2640

10,001 to 20,000 573 2.6690 8627480 1.7210

20,001 to 30,000 168 0.7830 4404660 0.8790

30,001 to 40,000 72 0.3350 2645130 0.5280

40,001 to 50,000 90 0.4190 4342390 0.8660

50,000 to 1,00,000 119 0.5540 9249900 1.8450

1,00,000 and above 105 0.4890 431740850 86.1370

Total 21469 100.0000 501225190 100.0000

Share AmountShare Holders

Shareholding pattern of the Company as on 31st March, 2007

Category No of Shares % of Shareholding

Promoters 12863655 25.6644

Persons acting in concert 16445234 32.8101

Bodies Corporate 9414850 18.7837

UTI & Mutual Funds 19500 0.0389

FIIs/ NRI 3323560 6.6309

Banks 149133 0.2975

Resident Individuals 7906587 15.7746

Total 50122519 100.0000

Registrar and Share Transfer System

All the applications regarding physical transfer, transmission,

splitting of share certificates, dematerialization and rematerialzation

are processed by the Registrar and Share Transfer Agents, Intime

Spectrum Registry Limited and approved by the Managing Director

periodically depending on thevolume of transfers. Share Certificatesare dispatched within the time prescribed under the Listing

Agreement/SEBI Guidelines.

Dematerialization of Shares and Liquidity

As on 31st March, 2007, 93.45% of the share capital of the Company

representing 4,68,39,704 equity shares were held in dematerialized

form and the balance 6.55% representing 32,82,815 equity shares

were held in physical form.

44


11/13


Listing of Debt Securities

Pursuant to the directions of Securities & Exchange Board of India

(SEBI) all the secured debt securities issued by the Company on

private placement basis have been listed in the Wholesale Debt

Market (WDM) Segment of the National Stock Exchange of India

Limited. The company complies with the listing requirements in

thisregard.

Outstanding GDRs/ADRs/ Warrantsor any convertible instruments

The Company has issued 70,65,456 Optionally Convertible

Preference Shares of face value Rs. 25/- each at a premium of Rs.

50/- each, aggregating to Rs. 52,99,09,200/- to M/s. Caledonia

Investments Plc, U.K. with an option to the Investor, to be converted

into 70,65,456 equity shares bearing a face value Rs. 10/- each and

a premium of Rs. 65/- per share, after 13 months but before

18months from thedate ofallotment .

The Company has also allotted 33,35,000 Convertible Warrants of

Rs. 75/- each, aggregating to Rs. 25,01,25,000/- on a preferential

basis, to M/s. Wadhawan Holding Private Limited, Promoter Group,

which shall, at the option of warrant holders, be converted into

33,35,000equity shares of Rs.10/-each ata premiumof Rs.65/-per

share, after 13 months but before 18 months from the date of

allotment ofthe said warrants.

Transfer of unclaimed dividend to InvestorEducation and Protection Funds

Pursuant to provisions of Section 205A(5) of the Companies Act,

1956, dividend which remains unpaid or unclaimed for a period of

seven years from the date of its transfer to unpaid dividend account

is required to transferred by the Company to the Investor Education

and Protection Fund (IEPF), established by the Central Government

under the provisions of Section 205C of the Companies Act, 1956.

Shareholders are advised to claim the unclaimed dividend lying in

theunpaid dividend account of theCompanybetween theduedates

of declarationof dividend and corresponding dates when unclaimed

divided are due for transfer to IEPF. Information in respect of such

unclaimed dividend for the three years when due for transfer to the

said Fund isgiven below :

Financial Date of Due forYear ended Declaration Transfer on

1999 2000 (Final) 18/08/2000 28/09/2007

2000-2001 30/07/2001 03/09/2008

2001-2002 31/07/2002 04/09/2009

Investor Correspondence

Shareholders may also contact the following for any assistance:

Shareholdersholding shares in electronicmodeshould addressall their correspondence through theirrespectiveDepositoryParticipants.

45

Registrar & Transfer Agent:

Share Registry

Intime Spectrum Registry Ltd.

C-13, Pannalal Silk Mills Compound, L. B. S. Marg, Bhandup (W), Mumbai - 400 078

Phone: 91-22-2596 3838 Fax: 91-22-2594 6969

[email protected]

Compliance Officer & Company Secretary,

6th Floor, Dheeraj Arma, Anant Kanekar Marg, Station Road, Bandra (East), Mumbai-400 051

Tel: 91-22- 2658 3333

email: [email protected]

Sr. Manager - Secretarial,

6th Floor, Dheeraj Arma, Anant Kanekar Marg, Station Road, Bandra (East), Mumbai-400 051

Tel: 91-22- 2658 3333

email: [email protected]

Mr. Sharad Patkar

Mr. S. Y. Sankhe

Mr. P. K. Kumar,


12/13Annual Report 2006-07 DHFL Changing Rules. Changing Lives

AUDITORS ON CORPORATE GOVERNANCEREPORT

To theMembers,

We have examinedthe compliance of conditionsof Corporate Governance by Dewan HousingFinance Corporation Ltd. for theyear ended 31st

March,2007, as stipulatedin Clause 49of theListing Agreement ofthe said Companywith thestock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to review of

the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of the Corporate

Governance as stipulated in thesaid Clause. Itis neitheran audit noran expressionof theopinion on thefinancial statementsof theCompany.

In our opinion and to the best of our information and according to the explanations given to us and based on the representations made by the

Directors and theManagement, we certify that the Company hascompliedwith theconditions of Corporate Governance as stipulated in Clause

49of theabovementioned ListingAgreement.

As required by the Guidance Note issued by the Institute of Chartered Accountants of India we have to state that no investor grievances were

pendingfor a periodof onemonthagainstthe Companyas perthe recordsmaintainedby theShareholders / InvestorsGrievancesCommittee.

We further state that such compliance is neitheran assurance as to the future viability of the Company nor of the efficiency or effectiveness with

which themanagementhas conducted the affairs of theCompany.

DewanHousing Finance CorporationLtd.

For B. M. CHATURVEDI & CO.

B. M. Chaturvedi

Chartered Accountants

ICAI M.No.17607Place : Mumbai

Date : 15 May 2007th

,

46


13/13

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL

WITHTHECOMPANYSCODE OF CONDUCT

This is to confirm that the Company has adopted a Code of Conduct for the Board of Directors and Senior Management of the Company.

Thesame is availableon websiteof theCompanyas www.dhfl.com.

As Vice Chairman and Managing Director of Dewan Housing Finance Corporation Limited and as required by Clause 49(1)(D)(ii) of the Listing

Agreement of the Stock Exchanges in India, I hereby declare that all the Board members and senior management personnel of the Company

haveaffirmedcompliancewith theCode ofConductfor thefinancial year 2006-07.

Kapil WadhawanVice Chairman & Managing Director

Place : Mumbai

Date : 15 May 2007th

,

report on coprorate governance 06-07

Documents