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(Pursuant to Clause 49 of the Listing Agreement) The detailed report on Corporate Governance for the financial year ended 31st March, 2007, as per the format prescribed by SEBI and incorporated in Clause 49 of the Listing Agreement is set out below: 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) has issued a revised set of Corporate Governance Principles which are adaptable to varying social, legal and economic frameworks in different countries and are considered as widely acceptable global benchmarks of Corporate Governance. Companies all over the world have realized that a vigorous quest of good governance is crucial for enduring success. N. R. Narayana Murthy Committee on Corporate Governance constituted by SEBI has observed that, Corporate Governance is the acceptance 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 corporate funds in the management of the Company. Companies have now become conscious of the importance of pursuing good 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.
powers and responsibilities have been delegated to the Committees of the Board of Directors. 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 insider trading.
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All the significant activities and transactions of the Company are regularly notified and reported to the Board. The minutes of all the Committeemeetings arealsoplaced duringevery Board Meeting. The Board is also provided other information as required by the listing requirements. An Action Taken Report (ATR) signifying the compliances of the decisions taken in the earlier Board Meeting by the Board is placed at every Board meeting which 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, 2006 and 25th January, 2007. The attendance of the Directors in the Board Meetings held during the financial year along with the attendance in the Annual General Meeting held on 17th July, 2006 is given as follows:
Name of Director
Category
Shri Rakesh Kumar Wadhawan Chairman Shri Kapil Wadhawan Vice Chairman & Managing Director Shri Sarang Wadhawan Shri R.P . Khosla Shri G. P . Kohli Shri R. S. Hugar Shri Ashok Kumar Gupta Shri Waryam Singh
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 Shareholders Grievances Committee are considered. The directorships and Committee positions held by the Directors in various Companies are given as follows:
Name of Director
Category Directorship
Shri Rakesh Kumar Wadhawan Shri Kapil Wadhawan Shri R.P . Khosla Shri G. P . Kohli Shri R. S. Hugar Shri Ashok Kumar Gupta Shri Sarang Wadhawan Shri Waryam Singh
Chairman Vice Chairman & Managing Director Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive
4 4 1 2 2 3 6 3
1 1 1 1 2 2 1 1 1
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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 minutes of the Committee Meetings are reported to the Board so that all the Board members are aware of the Committees 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 are placed for the perusal of the Board members.
To examine all taxation matters, including related legal cases and the Companys asset/liability management strategy (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 and reporting the matter to the Board. 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 time to time in Clause 49 of Listing Agreement.
The minutes of the meetings of the Committee are placed before the Board for noting and are also circulated to the members of the Committee. (b) Composition 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 independent directors. 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, the Statutory Auditors and the Internal Auditor/ Head of Internal Audit 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. (c) Meetings and the attendance during the year Four meetings of the Audit Committee were held during the yearon 15th May, 2006, 17th July, 2006, 19th October, 2006 and 25th 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 is as follows: Attendance of Directors Date of Meeting 15th May, 2006 17th July, 2006 19th Oct, 2006 25th Jan, 2007 Total Meetings Attended Shri R S Hugar Shri G P Kohli Yes Yes Yes No 3 Yes Yes Yes Yes 4 Shri Ashok Kumar Gupta Yes Yes Yes Yes 4
Audit Committee
(a) Terms of 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 the Board also include but are not limited to the following functions: To oversee the financial reporting process and disclosures of financial information. 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 other legal requirements relating to financial statements. 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 fixing their remuneration. To review all issues which are required to be reviewed by the audit committee pursuant to the listing agreement with the stock exchanges and the Companies Act, 1956 with the management and the internal and external auditors. To review with the management the financial statements with reference to any related party transactions. To review the observations of internal and statutory auditors in relation to all areas of operation of the Company, including internal control systems.
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Report of the Audit Committee for the year ended 31st March, 2007
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. The Committee has recommended to the Board the reappointment of and audit fees to M/s B.M. Chaturvedi & Co. as the Statutory Auditors of the Company for the financial year 2007-08.
3)
To authorize operation of accounts of the Company with its bankers and to vary the existing authorization to operate the same and granting of general /specific power of attorney to the officers at the branches for routine matters and any such matters pertaining to the routine functions. 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 products issued by the Company. To consider and 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. To grant approvals of loans upto Rs 30 crore to any person, firm or body corporate at any time or from time to time subject to the limits prescribed under the Housing Finance Companies (NHB) Directions, 2001, as may be applicable.
4)
5)
6)
Finance Committee
a) Composition
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. b) Terms of Reference
The terms of reference of the Finance Committee includes the following: 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 overall limit upto which the Board of Directors of the Company is authorized/to be authorized under section 293(1)(d) of the Companies Act, 1956. To consider and approve/accept the letters of sanction by the term lending institutions/banks/NHB and other bodies corporate, opening and/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 the same.
2)
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The Company currently does not have any stock option outstandings. Details of remuneration of Directors for the year ended 31st March 2007 are as follows:
Salary Commission Sittings Fees 1,42,857.00 19,44,000.00 9,00,000.00 1,42,857.00 1,42,857.00 1,42,857.00 1,42,857.00 1,42,857.00 1,42,857.00 1,85,000.00 0.00 55,000.00 2,50,000.00 85,000.00 1,00,000.00 60,000.00 65,000.00
Shri R. P . Khosla Shri G. P . Kohli Shri R. S. Hugar Shri Ashok Kumar Gupta Shri Sarang Wadhawan Shri Waryam Singh Total
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.
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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 and CDSL and the shares issued from time to time were listed with the Stock Exchanges.
the various guidelines which are to be complied by all the Branch Managers, frontline staff and compliance staff 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 also required to keep a vigilant look on the transactions 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
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 website of the Company www.dhfl.com.
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 being eligible, offer themselves for re-appointment.
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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 Audited Financial 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 English and in Maharashtra Times in 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 shareholders at the Annual General Meeting. 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 and official news release are also displayed on the Company's web site and on the websites of The Stock Exchange, Mumbai and National Stock Exchange.
Monday, 23rd July, 2007 at 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 March First 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.
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
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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
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
BSE-Price Period
April.06 May.06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb.07 Mar.07
High
80.00 96.00 101.80 69.45 71.00 88.45 83.85 83.70 80.90 88.50 88.95 73.50
Low
64.00 63.00 53.00 51.00 57.00 61.85 71.50 67.50 71.10 75.30 63.00 59.00
High
82.65 95.90 101.80 69.35 71.20 88.50 83.85 84.00 80.75 88.40 89.00 73.60
Low
60.00 63.00 53.15 51.00 57.25 61.80 71.70 67.25 71.50 75.30 66.35 59.00
Qty. Traded
5836093 37125487 52809060 7400787 8541341 48321935 10764417 11264565 3870069 9610551 5310991 1038176
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Distribution of Shareholding as on 31st March, 2007 Shares holding of nominal Value Rupees
1 Upto 5,001 10,001 20,001 30,001 40,001 50,000 1,00,000 Total to to to to to to 5,000 10,000 20,000 30,000 40,000 50,000 1,00,000 and above
Category
Promoters Persons acting in concert Bodies Corporate UTI & Mutual Funds FIIs/ NRI Banks Resident Individuals Total
No of Shares
12863655 16445234 9414850 19500 3323560 149133 7906587 50122519
% of Shareholding
25.6644 32.8101 18.7837 0.0389 6.6309 0.2975 15.7746 100.0000
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Date of Declaration
18/08/2000 30/07/2001 31/07/2002
Investor Correspondence
Shareholders may also contact the following for any assistance:
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We have examined the compliance of conditions of Corporate Governance by Dewan Housing Finance Corporation Ltd. for the year ended 31st March, 2007, as stipulated in Clause 49 of the Listing Agreement of the said Company with the stock 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 the said Clause. It is neither an audit nor an expression of the opinion on the financial statements of the Company.
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 the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement.
As required by the Guidance Note issued by the Institute of Chartered Accountants of India we have to state that no investor grievances were pending for a period of one month against the Company as per the records maintained by the Shareholders / Investors Grievances Committee.
We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.
B. M. Chaturvedi
ICAI M.No.17607
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DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANYS CODE 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. The same is available on website of the Company as 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 have affirmed compliance with the Code of Conduct for the financial year 2006-07.
Kapil Wadhawan
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