REPORT ON CORPORATE GOVERNANCE
COMPANY'S PHILOSOPHY ON CODE OF GOVERNANCE
Corporate Governance is a code that sets the principles, systems, and practices through which the Board of Directors of the Company ensures transparency, fairness and accountability in the Company's relationship with all its stakeholders, viz. regulators, shareholders, creditors, government agencies, employees, among others. The code of governance is based on the principles of making all the necessary decisions and disclosures, accountability and responsibility towards various stakeholders, complying with all the applicable laws and a continuous commitment of conducting business in a transparent and ethical manner.
We at DHFL, practice a trustworthy, transparent, moral and ethical conduct, both internally and externally, and are committed towards maintaining the highest standards of Corporate Governance practices in the best interest of all its stakeholders.
DHFL believes that it not only has legal, contractual and social responsibilities, but also has obligations towards its non-shareholder stakeholders such as bankers, regulators, government agencies, employees, investors, creditors and customers, among others. DHFL strives to ensure that all its stakeholders have an access to clear, adequate and factual information relating to the Company at all times. It promotes accountability of its management and the Board of Directors acknowledges its responsibilities towards its stakeholders for creation and safeguarding their wealth.
The report of the Company on Corporate Governance as per Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [herein referred as "SEBI Listing Regulations"] is listed hereunder:
BOARD OF DIRECTORS
DHFL's Board of Directors play a pivotal role in ensuring that good corporate governance practices are followed within the Company. The Board of Directors oversees the functioning of the Company and that of its management; and ensures that every decision taken is in the best interest of the stakeholders of the Company.
The Board while performing its fiduciary duties recognizes its responsibilities towards the shareholders and other stakeholders, to uphold the highest standards in all matters concerning the Company and for the purpose ensures proper delegation of appropriate authority to the senior officials of the Company for effective management of operations.
The Board monitors and approves the annual budgets, business plans & strategies and various policies of the Company. It also reviews the operational and financial performance of the Company. The Board ensures the integrity of financial reporting system, financial & internal control, risk management and compliance with the applicable laws. It also oversees the process of disclosure & communications made by the Company and ensures that a transparent nomination process to the Board of the Company is duly followed.
Composition of the Board
The Composition of the Board of Directors of the Company is in compliance with Regulation 17 of the SEBI Listing Regulations. The Board of Directors of the Company has an optimum combination of Executive, Non Executive and Independent Directors. The Board of your Company is headed by an Executive Director (designated as the Chairman and Managing Director) and comprises of other six Directors, out of which one is a Non - Executive Director and five are Independent Directors including one Woman Director.
Directorships and Membership of the Directors in other Companies/Committees
All the Directors of the Company are compliant with the applicable provisions of Companies Act, 2013 and SEBI Listing Regulations with respect to their number of Directorship in other Companies and chairmanship/membership on various Committees.
The Company holds minimum four pre-scheduled Board meetings annually, one in each quarter, inter-alia, to review the financial results of the Company. The maximum time gap between two Board meetings is not more than one hundred and twenty days. Additional Board Meetings are held by the Company to address specific needs, as and when required. In case, of urgency or business exigencies, matters are also approved by way of circular resolution as per the provisions of Companies Act, 2013 and subsequently noted at the next Board meeting.
The functional/business heads of the Company periodically give presentations covering their respective operations, performance, plans and strategies and discuss upon the areas of improvement and prospective opportunities. The Company circulates the agenda and related notes/ documents well in advance through its e-based model known as the Board Meeting Organiser (BMO) to the Board and its Committee Members thereof. This model provides for an easy access, quick reference and availability of data at a click of a button without compromising on the confidentiality of information, at all times.
The notes are comprehensive in nature which, inter-alia, includes:
Quarterly/Half Yearly/Annual financial results of the Company
Annual budgets /plans of the Company and any updates thereon
Minutes of various committees of the Board Information on the exits and recruitments including the remuneration of senior officials just below the Board level
Significant transactions, related party transactions and arrangements
Details of Joint Ventures and regular updates on the existing joint ventures of the Company Quarterly details of foreign exchange exposures and the steps taken by management to limit the risks of adverse exchange rate movement of material nature Compliance reports pertaining to all the laws applicable to the Company
Regulatory notices/judgement/order being material in nature
Approvals on the sale of investments/assets of material nature
Update on non-fulfilment or defaults by the Company of any financial liability /obligations of material nature Update on shareholders' grievance redressal process
As a practice, the Company Secretary communicates all important decisions taken by the Board Members/ Committee Members to the functional head of the concerned department. An Action Taken Report (ATR) on the decisions taken and matters discussed in the previous meeting is outlined and placed in the succeeding meeting of the Board/ Board Committee for their information and noting.
The Company follows a structured orientation programme for its newly inducted Director(s) to ensure that they become fully aware of the industry in which the Company operates, the processes, systems and policies adopted and followed by the Company. The Company also aims at informing the Directors on the legal, regulatory as well as socio-economic regime in which the Company functions. The familiarization programme for the new and continuing Independent Directors of the Company ensures valuable participation and inputs from them which helps in bringing forth the best practices to the Company and help in making informed decision(s) at the Board Level.
Additionally, the Independent Directors are briefed on their roles, duties, rights and responsibilities as a Director of the Company. It ensures that regular updates are provided to the Directors on the changes/revision in the Company's business model, new developments & initiatives undertaken by the Company, new processes & policies adopted/revised, amendment/introduction of applicable laws and/or regulations etc.
The familiarization programme of the Company is uploaded on the Company's website and is available at the URL: <http://www.dhfl.com/about-us/board-of-directors/> other-board-information/familiarization-programme/
COMMITTEES OF THE BOARD
The Board of Directors has constituted six (6) committees namely - Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Risk Management Committee, Finance Committee and Corporate Social Responsibility Committee which enables the Board to deal with specific areas / activities that need a closer review and to have an appropriate structure to assist in the discharge of their duties and responsibilities.
The Committees of the Board meet at regular intervals and have the requisite subject expertise to handle and resolve matters expediently. The Board overlooks the functioning of the Committees. The Chairman of the respective Committees briefs the Board on significant discussions and decision taken at their respective meetings. Minutes of the Committee Meetings are placed in the subsequent Board Meeting for their noting.
The Company Secretary acts as a Secretary to all the Committees of the Board.
Detailed terms of reference, composition, meetings and other information of each of the Committees of the Board are detailed herein below:
a. Audit Committee
The Audit Committee of the Board is constituted in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI Listing Regulations.
All the Members of the Audit Committee have the required qualification and expertise for appointment on the Committee and possess requisite knowledge of accounting and financial management.
The representatives of the statutory auditors are the permanent invitees to the meetings of the Committee wherein the financial statements/results are discussed. In addition to the representatives of the Statutory Auditors, Head (Audit & Inspection) alongwith the Chief Executive Officer and the Chief Financial Officer are also invited to attend the Audit Committee meetings. Various Functional Heads and Senior Management Personnel are invited to the meetings to give presentations relating to their respective function.
The Chairman of the Audit Committee was present at the last (31st) Annual General Meeting of the Company.
Terms of Reference of the Audit Committee is as follows: To oversee the Company's financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible
To recommend to the Board, the appointment, re-appointment and, if required, the replacement or removal of the statutory auditors and the fixation of audit fees
To approve the payment to statutory auditors for any other services rendered by them
To review with the management, the annual financial statements before submission to the board for approval, with particular reference to:
a. Matters required to be included in the Director's Responsibility Statement to be included in the Board's report
b. Changes, if any, in accounting policies and practices and reasons for the same
c. Major accounting entries involving estimates based on the exercise of judgment by management
d. Significant adjustments made in the financial statements arising out of audit findings
e. Compliance with listing and other legal requirements relating to financial statements
f. Qualifications in the draft audit report.
To review with the management, the quarterly financial statements before submission to the board for approval
To review with the management, the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/ notice and the report submitted by the monitoring agency monitoring the utilization of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter
To review with the management, performance of statutory and internal auditors, and monitor auditor's independence and performance; and effectiveness of the audit process and adequacy of the internal control systems
To review the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit To review the findings of any internal investigations 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 discuss with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern
To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, members (in case of nonpayment of declared dividends) and creditors
To approve the appointment of CFO (i.e., the whole-time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience & background, etc., of the candidate To consider, suggest modification and or recommend/ approve, the related party transactions of the Company
To scrutinize inter-corporate loans and investments; To consider valuation of assets or undertaking of the Company wherever required
To evaluate internal financial controls and risk management systems
To review and formulate the scope, functioning, periodicity, methodology for conducting the internal audit, in consultation with the Internal Auditor and to discuss with the internal auditors any significant findings and follow up there on
To have the authority to investigate into any matter as included in its terms of reference or referred to it by the Board and for this purpose the Audit Committee to have power to obtain professional advice from external sources and have full access to information contained in the records of the company.
To review the Company's Vigil Mechanism as defined under the Whistle Blower Policy of the Company with regard to the process/procedure prescribed for its employees and directors to raise concerns, in confidence, about possible wrongdoing in financial reporting, accounting, auditing or other related matter. To ensure that these arrangements allow independent investigation of such matters and appropriate follow up action.
Any other function as may be stipulated by the Companies Act, 2013, SEBI, Stock Exchanges or any other regulatory authorities from time to time.
Composition and Meetings
The Audit committee was last reconstituted by the Board of Directors at their meeting held on October 21, 2014. The composition of the Audit Committee is as per the provisions of Companies Act, 2013 and SEBI Listing Regulations
The Company holds minimum four pre-scheduled Audit Committee meetings annually, one in each quarter and the maximum time gap between two audit Committee meetings is not more than one hundred and twenty days.
During the financial year 2015-16, six (6) Audit Committee meetings were held on April 29, 2015, July 23, 2015, September 10, 2015, October 20, 2015, January 20, 2016 and March 9, 2016. The composition and the attendance thereat of the members of the Committee are given herein below:
b. Nomination and Remuneration Committee
The Nomination and Remuneration Committee is constituted in compliance with the requirements of provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI Listing Regulations.
Terms of Reference of the Nomination and Remuneration
Committee is as follows:
To identify and recommend to the Board, in accordance with the criteria as laid down, appointment/reappointment/removal of the Executive /Non - Executive Directors and the senior management of the Company To formulate criteria for evaluation and evaluate the performance of every director including the Independent Directors.
To formulate the criteria for determining qualifications, positive attributes and independence of the Directors.
To recommend to the Board a remuneration policy for the Directors, Key Managerial Personnel and other employees of the Company.
To devise a Policy on Board Diversity of the Company. To monitor and handle any other matter relating to framing/administration of SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 or any amendments thereof.
Any other function as may be mandated by the Board or stipulated by the Companies Act, 2013, SEBI, Stock Exchanges or any other regulatory authorities from time to time.
Composition and Meetings
The Nomination and Remuneration Committee was last re-constituted by the Board of Directors on November 5, 2014. The composition of the Nomination and Remuneration Committee is as per the provisions of Companies Act, 2013 and SEBI Listing Regulations
The Chairman of the Nomination and Remuneration Committee was present at the Thirty First (31st) Annual General Meeting of the Company.
The Company has a duly formulated Nomination (including Board Diversity), Remuneration and Evaluation Policy (NRE Policy) as per the provisions of Companies Act, 2013 and the SEBI Listing Regulations which, inter-alia, lays down the criteria for identifying the persons who are qualified to be appointed as Directors and such persons who may be appointed as Senior Management Personnel of the Company and also lays down the criteria for determining the remuneration of the Directors, Key Managerial Personnel (KMP) and other employees and their evaluation.
The NRE Policy of the Company, inter-alia, provides for the attributes for appointment, components of the remuneration and the process of performance evaluation relating to the Directors, Key Managerial Personnel (KMP) and other employees of the Company as explained below:
a. Appointment criteria, remuneration terms and performance evaluation of the Executive Director/ Whole Time Director:
The Executive Director/ Whole Time Director is appointed as per the applicable provisions of
Companies Act, 2013 and rules made thereunder. The person to be appointed/re-appointed as Executive Director/Whole Time Director is assessed against a range of personal attributes and criteria which includes but is not limited to qualifications, skills, industry experience, and background etc. The remuneration being paid to the Executive Director/ Whole Time Director carries a balance between fixed and incentive pay (commission, bonus etc.) based on the performance objectives in relation to the operations of the Company. The Compensation (fixed salaries) paid to Executive Director/ Whole Time Director is competitive and reflects the individual's role, responsibility and experience in relation to performance of business operations of the Company. This includes salary, allowances and other statutory/ non-statutory benefits. The remuneration paid to the Executive Director/ Whole Time Director also includes a variable component which is determined by the Committee/Board, based on the performance against pre-determined financial and non-financial parameters. The total managerial remuneration payable by the Company to the Executive Director/ Whole Time Director is within the limits prescribed under the Companies Act, 2013. The Executive Director/Whole Time Director is evaluated on the basis of his present performance (financial/non-financial) and his achievements against various key performance parameters as defined by the Board of Directors of the Company. The performance evaluation of the Executive Director/ Whole Time Directors is carried out by the Nomination and Remuneration Committee, the Independent Directors in a separate meeting, and by the Board of the Company without the presence of the Executive Director/ Whole Time Director being evaluated. The re-appointment of the Executive Director/ Whole Time Director is on the basis of the report of his performance evaluation.
b. Appointment criteria, remuneration terms and performance evaluation of the Non - Executive Director(s)/ Independent Director: The NRE policy of the Company aims at promoting diversity on the Board. The Nomination and Remuneration Committee ensures that the Board at all times represents an optimum combination of Executive and Non-Executive Directors as well
as Independent Directors with atleast one woman Director and not less than fifty percent of the Board comprising of Independent Directors. The selection of suitable candidate(s) for the directorship of the Company is based on various criteria viz. educational and professional background, personal achievements, experience, skills etc.
The Non - Executive Director is appointed as per the applicable provisions of the Companies Act, 2013 and rules made there under and assessed on various parameters such as qualification, relevant experience and expertise, integrity, skill sets, etc. The appointment of Independent Directors is made in accordance with the provisions of Companies Act, 2013 and SEBI Listing Regulations. A formal letter of appointment is also issued to the Independent Directors upon their appointment. Independent Directors of the Company are not entitled to stock options. Commission, if any, paid to the Non-Executive Directors and the Independent Directors is within the monetary limits approved by the Members of the Company, subject to the overall ceiling of 1% of the net profits of the Company computed as per the applicable provisions of Companies Act, 2013. The sitting fees is paid to the Non-Executive Directors and the Independent Directors within the limits as prescribed under Companies Act 2013. The Company also reimburses the expenses for attending the Board and other Committee meetings including travelling, boarding and lodging expenses to the Non-Executive Directors and the Independent Directors.
The performance evaluation of the Non-Executive Directors and the Independent Directors is carried out by the Nomination and Remuneration Committee and the Board of the Directors excluding the Director being evaluated. The performance evaluation of the Non-Executive Director is also carried out by the Independent Directors in a separate meeting. Re-appointment of a Director is based on the report of performance evaluation.
c. Appointment criteria, remuneration terms and performance evaluation of the Senior Management Personnel and other employees: The Company appoints KMP i.e. Whole Time Director, Chief Executive Officer, Chief Financial Officer and Company Secretary of the Company as per the provisions of Section 203 of the Companies Act, 2013. The Company recruits individuals with appropriate mix of skills, experience and personal attributes. For the appointment of employees, the criteria such as qualifications, skills, regional and industry experience, background and other qualities required to operate successfully in the respective position and the extent to which the appointee is likely to contribute to the overall effectiveness of the organization, work constructively with the existing team and enhance the efficiencies of the Company is considered.
The remuneration for the Chief Executive Officer, Chief Financial Officer and Company Secretary at the time of the appointment is approved by the Board and any subsequent increments is approved by the Chairman & Managing Director of the Company as per the HR policy of the Company and the same is placed before the Nomination and Remuneration Committee and the Board. The remuneration of the employees is determined, after considering the key factors like:
a. The level and composition of remuneration should be reasonable and sufficient to attract, retain and motivate directors/executives and should be in line with the industry practice aimed at promoting the short term and long term interests and performance of the company.
b. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks.
c. Remuneration will involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
The performance of the other employees is evaluated on annual basis as per Company's and individual employees performance and contribution to the overall goals / objectives of the Company.
Details of the Evaluation Process
In terms of the NRE Policy and the applicable provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Nomination and Remuneration Committee at its meeting held on March 21, 2015 laid down the criteria for evaluation/assessment of the Directors (including the Independent Directors) of the Company and the Board as a whole (including the Board Committees) which were subsequently revised on May 4, 2016.
In accordance with the provisions of Schedule IV of the Companies Act, 2013 and the SEBI Listing Regulations, a separate meeting of the Independent Directors without the attendance of Non- Independent Directors and the members of the Management was held on March 26, 2016, inter-alia, to review the performance of the Chairman & Managing Director of the Company, Non-Executive Director and the Board as a whole (including its Committees thereof). The Independent Directors also assessed the quality, quantity and timelines of flow of information between the Company Management and the Board based on various components viz. relevant and adequate information being provided, circulation of agenda and related notes in advance, regular information/updates etc. Mr. G.P. Kohli acted as the Lead Independent Director.
As per the provisions of Companies Act 2013 and SEBI Listing Regulations, the Nomination and Remuneration Committee also carried out the evaluation of the performance of each Director of the Company in their respective meetings held on May 4, 2016. As a part of the performance evaluation process, self-assessment was also carried out by all the Directors (including the Independent Directors).
Pursuant to the report/feedback on the evaluation as carried out by the Nomination and Remuneration Committee and the Independent Directors in a separate meeting, the Board conducted its formal annual evaluation of its own performance, its Committees and the individual Directors (without the presence of the Director being evaluated) at its meeting held on May 4, 2016. Basis the said evaluation, the Nomination and Remuneration Committee made recommendations for the re-appointment/ appointment of the Non-executive Director and Independent Director.
Criteria for evaluation of Board and its Committees
The evaluation of the Board and its committees were based on the criteria, inter-alia, covering various assessment parameters like structure and composition, frequency & duration of meetings, its processes and procedures,
effectiveness of the Board/ committees, its financial reporting process including internal controls, review of compliances under various regulations, adequately discharge of responsibilities entrusted under various regulations and/ or terms of reference of the committees etc.
Criteria for evaluation of Individual Directors
The criteria for evaluation of performance of the individual Directors included various parameters viz. attendance & participation during the meetings, their active contribution & independent judgment, cohesiveness, discussions/ deliberations on important matters, understanding of the Company, etc. The Chairman and Managing Director, in addition to the above, was also evaluated on his achievements against various key performance parameters (financial / non-financial) for the financial year 2012-16.
Details of remuneration including commission and other payments to the Directors
The brief terms and conditions of Mr. Kapil Wadhawan, upon re-appointment by the Members of the Company as the Managing Director (designated as Chairman & Managing Director) of the Company for a term of five years, as set out in the agreement dated October 4, 2012, entered into with the Company, are listed below
Commission : Commission per annum shall be equivalent to such sum as fixed by the Board of Directors / Nomination and Remuneration Committee, in conformity with the applicable provisions of Companies Act 2013 and rules made there under. The said commission shall be payable based on the set goals and performance criteria/ parameters as defined by Nomination & Remuneration Committee and/ or the Board of Directors of the Company.
Perquisites/Allowances : The Perquisites and allowances, as aforesaid, shall include (a)Rent-free accommodation (furnished or otherwise) or House Rent Allowance, in lieu thereof; (b)House maintenance allowance together with reimbursement of expenses and / or allowances for utilisation of gas, electricity, water, furnishing & repairs, (c) Leave Travel Concession for self and family including dependents, (d) Fees for Club Membership, (e) Payment of Insurance Premium on policies relating to Health Insurance, Personal Accident Insurance and Others, (f) Reimbursement of Medical Expenses. The valuation of perquisites and allowances shall be as per the provisions of Income Tax Act, 1961 or any rules thereunder or any statutory modification(s) or re-enactment(s) thereof; in the absence of any such rules, perquisites and allowances shall be evaluated at actual cost.
The Contribution to provident fund, superannuation or annuity fund, to the extent these, singly or together, are not taxable under the Income Tax law, gratuity payable and encashment of leave, as per the rules of the Company and to the extent not taxable under the Income Tax law, shall not be included for the purpose of computation of his overall ceiling of remuneration.
The expenses incurred by Mr. Kapil Wadhawan for travelling, boarding and lodging during business trips; provision of cars for official use and his telephone expenses shall be reimbursed at actuals and not considered as perquisites.
Other terms: The overall remuneration payable every year to Mr. Kapil Wadhawan - Chairman & Managing Director by way of basic salary, perquisites/ allowances and commission shall not exceed in aggregate, 1% (one percent) of the net profits of the Company as computed in the manner laid down in Section 198 of the Companies Act, 2013 and the rules made thereunder. In the event of any loss, or absence or inadequacy of profits in any financial year, during the term of office of Mr. Kapil Wadhawan, the remuneration payable to him by way of salary, allowances, commission and perquisites shall not be paid in excess of the limits prescribed in Schedule V of the Companies Act, 2013 or with the approval of the Central Government.
Notice period/severance fee: The office of the Chairman & Managing Director may be terminated either by the Company or by him, by way of giving 3 (three) months' prior notice in writing. Further, the Chairman & Managing Director shall not be entitled to any sitting fees for attending the meetings of the Board or of the Committee(s) of which he is a Member. There is no provision for payment of any severance fee to the Chairman & Managing Director.
Non-Executive and Independent Directors
None of the Non-Executive and Independent Directors of the Company have any pecuniary relationship with the Company except as mentioned herein below.
The Non-Executive and Independent Directors are paid sitting fees and other expenses (travelling, boarding and lodging) incurred for attending the Board/Committee meetings. In view of the provisions of Companies Act, 2013, which provides for higher ceiling of sitting fees payable to the Board of Directors, the sitting fees payable to Non-Executive and Independent Directors for attending each meeting is fixed at Rs. 45,000 for Board Meetings and Rs. 35,000 for Audit Committee Meeting. The sitting fees for other committee meetings namely Nomination & Remuneration Committee Meeting, Finance Committee Meeting, Risk Management Committee and Corporate Social Responsibility Committee Meeting is fixed at Rs. 18,000 per meeting, respectively and Rs. 10,000 per meeting for attending Stakeholders' Relationship Committee Meeting.
As per the approval of the Board of Directors and Members approval at the 31st Annual General Meeting of the Company held on July 23, 2015, Non-Executive Directors of the Board of the Company are also entitled to a commission not exceeding one percent (1%) of the net profits of the Company. On the basis of the recommendation of Nomination & Remuneration Committee, the Board of Directors at its meeting held on January 20, 2016, approved the payment of Commission of Rs. 10,00,000 per director to Non-Executive Directors (Independent and Non-Independent) for the financial year 2015-16 with effect from April 1, 2015, payable on pro rata basis, aggregate being within the overall ceiling of one percent (1%) of the net profits of the Company.
c. Stakeholders' Relationship Committee
The Stakeholders' Relationship Committee of the Board was constituted in compliance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 20 of the SEBI Listing Regulations.
The Terms of Reference of the Stakeholders' Relationship
Committee is as follows:
To redress the complaints of the members and investors, related to transfer and transmission of securities, non-receipt of annual reports, dividends and other securities related matter
To review the requests/complaints received by the Registrar and Share Transfer Agent from the Members relating to transfer, transmission, consolidation, replacement of share certificates issue of duplicate certificates and dematerialization of securities certificates.
To review the certificates and reports submitted by the Company to the Stock Exchanges under the SEBI Listing Regulations(erstwhile Listing Agreement) .
To observe the quarterly status of the number of shares in physical as well as dematerialized form. To review the periodicity and effectiveness of the share transfer process, statutory certifications, depository related issues and activities of the Registrar and Share Transfer Agent. To monitor and resolve/redress the grievances of Security Holders i.e. Members, Fixed Depositors or Debenture Holders or Commercial Paper Investors or any other Investors of the security/ies issued by the Company.
To recommend measures for overall improvement in the quality of investors services. Any other function as may be stipulated by the Companies Act , 2013, SEBI, Stock Exchange or any other regulatory authorities from time to time.
Composition and Meetings
The Committee was last reconstituted on November 2, 2014. The composition of the Stakeholders Relationship Committee is as per the provisions of Companies Act, 2013 and SEBI Listing Regulations. The Chairman of the Stakeholders' Relationship Committee was present at the Thirty First (31st) Annual General Meeting of the Company.
Mrs. Niti Arya - Company Secretary acts as the Secretary to the Committee and is the Compliance Officer of the Company.
Details of Complaints/grievances received
During the year, the Company has received 24 (Fifty four) complaints from its shareholders relating to non receipt of share transfer certificates, non receipt of dividend, non receipt of annual report etc. All the Complaints were redressed to the satisfaction of the shareholders and there were no pending/unresolved complaints at the end of the financial year.
The Company received 27 (Twenty Seven) complaints from the fixed deposit holders of the Company and all the complaints stands resolved as at the end of the financial year ending March 31, 2016. During the year, Company did not receive any complaint from its debenture holders.
d. Risk Management Committee
The Risk Management Committee of the Board was constituted in compliance with the provisions of Regulation 21 of the SEBI Listing Regulations. The terms of Reference of the Risk Management Committee was last revised on January 20, 2016.
Terms of Reference of the Risk Management Committee is as follows:
To review and monitor the Risk Management Policies and Procedures
To ensure that the Credit Exposure of the Company to any single/group borrowers does not exceed, the internally set limits and the prescribed exposure ceilings by the Regulator
To review the Risk Monitoring System
To review and verify adherence to various risk parameters set-up for various Operations/Functions.
To review the Asset-Liability Management Mechanism of the Company
To undertake such other function as may be mandated by the Board or stipulated by the Companies Act, 2013, SEBI, Stock Exchanges or any other regulatory authorities from time to time.
Composition and Meetings
The Composition of the Risk Management Committee is in compliance with the requirements of SEBI Listing Regulations. The Chief Risk Officer is a permanent invitee to the Committee. The Chief Executive Officer of the Company also attends the meetings of the Risk Management Committee as an invitee.
e. Finance Committee
The terms of reference of Finance Committee were last amended on October 20, 2015.
Terms of Reference of the Finance Committee is as follows:
To borrow moneys for the purpose of the Company's Business in accordance with the Companies Act, and any modification and enactment thereof, if any and but not exceeding the overall limit up to which the Board of Directors of the Company are authorized/ to be authorized under the Companies Act, and any modification and enactment thereof;
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 purpose;
To authorize operation of such 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 approval of loans above Rs. 200 crore upto prudential exposure norms as per NHB guidelines to any person, firm or body corporate at any time or from time to time.
To open and close the current account(s) with any banks at any place outside the territory of India and to finalize/vary the authorization (s) to operate the same.
To open and close the securities/demat/custodian accounts(s) with any depository /participant at any place in India and abroad and to finalize/vary the authorization(s) to operate the same.
Composition and Meetings
The Finance Committee was last re-constituted on November 5, 2014. During the financial year 2015-16, the Committee met Thirty Five  times on April 9, 2015, April 20, 2015, April 28, 2015, May 14, 2015, May 20, 2015,May 29, 2015, June 23 2015, June 29, 2015, July 8, 2015, July 16, 2015, August 6, 2015, August 20, 2015, August 25, 2015, August 31, 2015, September 8, 2015, September 15, 2015, September 28, 2015, October 13, 2015, October 23, 2015, October 30, 2015, November 9, 2015, November 30, 2015, December 9, 2015, December 23, 2015, December 30, 2015, January 12, 2016, January 27, 2016, February 19, 2016, March 8, 2016, March 9, 2016, March 15, 2016, March 21, 2016, March 23, 2016, March 29, 2016 and March 30, 2016 .
f. Corporate Social Responsibility (CSR) Committee
The Corporate Social Responsibility Committee is constituted in line with the requirements of Section 135 of the Companies Act, 2013
Terms of Reference of the CSR Committee is as follows: To establish and review of corporate social responsibility policies;
To identify, segment and recommend the CSR projects/programs/activities to the Board of Directors;
To recommend the amount of expenditure to be incurred on the activities as identified for CSR by the Company;
To oversight the implementation of corporate social responsibility projects/ programs/ activities;
To review the annual budgets/expenditure with respect to corporate social responsibility programs/ projects/activities;
To work with management to establish and develop the Company's strategic framework and objectives with respect to corporate social responsibility matters;
To receive reports on the Company's Corporate Social Responsibility programs/ projects/ activities;
To establish and review the implementation mechanism for the CSR programs/ projects/activities undertaken by the Company;
To establish and review the monitoring mechanism of CSR projects/programs/activities;
To review the CSR initiatives and programs/projects/ activities undertaken by the Company;
To review the Company's disclosure relating to corporate social responsibility matters in accordance with the requirements of the regulatory provisions;
To obtain legal or other independent professional advice/assistance;
To form and delegate authority to any sub-committee or employee(s) of the Company or one or more members of the committee
Any other function as may be stipulated by the Companies Act, 2013, SEBI, Stock Exchanges or any other regulatory authorities from time to time.
Composition and Meetings
The Corporate Social Responsibility Committee was constituted on October 22, 2012. During the financial year 2012-16, the Committee met three (3) times on April 29, 2012, September 14, 2012 and February 11, 2016. The composition and the attendance thereat of the members of the Committee are given herein below:
SPECIAL COMMITTEES OF THE BOARD
The Board of Directors has constituted two committees with specific objectives, namely, Allotment Committee and Sub-Committee for Investment in Mutual Fund, the details of the composition along with the brief terms and meetings of the said Committees are as follows:
a. Allotment Committee
The Allotment Committee was constituted by the Board of Directors at their meeting held on January 20, 2016, to take decisions with regard to pricing of the convertible warrants as per Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 Tenure of Warrants, Tranches of exercise of warrants, time of conversion, entitlement against the warrants, mode of payment of consideration, rights of warrants holders and other related matters with regard of allotment of warrants convertible into equivalent number of Equity Shares on preferential basis to the Promoter Group entity i.e. Wadhawan Global Capital Private Limited. During the year under review, two meetings were held on January 29, 2016 and March 11, 2016 which were attended by both the Committee Members. The Composition of the Committee is as mentioned below:
b. Sub-Committee for Investment in Mutual Fund
The Sub - Committee was constituted by the Board of Directors of the Company at their meeting held on October 21, 2014 to make decisions for making investments in mutual fund sector. As at March 31, 2016, four (4) SubCommittee Meetings were held on October 28, 2014, September 22, 2012, February 9, 2016 and March 30, 2016, which were attended by all the Members of the Committee. The Board of Directors at their meeting heldon May 4, 2016, unanimously agreed to dissolve the said committee since the purpose of the constitution of this Committee was duly met with. The Composition of the Committee is as mentioned hereinafter:
As at March 31, 2016, the Company has an unlisted Wholly Owned Subsidiary namely DHFL Advisory & Investments Private Limited which was incorporated on February 12, 2016.
As per the provisions of Regulation 16 (c) of the SEBI Listing Regulations, DHFL Advisory & Investments Private Limited is not a material subsidiary. The Company ensures compliance with the requirements as listed out under Regulation 24 of SEBI Listing Regulations in respect of its unlisted Subsidiary Company. The policy on determining material subsidiary (ies) as formulated by the Board of Directors of the Company is available on the website of the Company at URL:<http://www.dhfl>. com/investors/policies-codes/policy-on-determining-material-subsidiary/. The subject policy inter-alia, lays down the criteria of determining material subsidiary/ies, governance requirements, manner of disposal of shares by the Company and selling/disposing/leasing of assets of the material subsidiary.
MEANS OF COMMUNICATION
The primary source of information to the shareholders, customers, analysts and to the public at large is through the website of the Company i.e. www.dhfl.com The Company maintains a functional website and disseminates, inter-alia, the following information:
details of its business
terms and conditions of appointment of independent directors
composition of various committees of board of directors
the email address for grievance redressal and other relevant details
contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances
financial information including notice of Board Meetings, financial results, annual report and other material information shareholding pattern
schedule of analyst or institutional investors meet and/or presentations made by the Company to analyst or institutional investors and such other required information in terms of Regulation 46 of SEBI Listing Regulations.
The Company regularly updates any change in the content of the website within two working days of such change.
The Annual Report, annually/half yearly/ quarterly results, shareholding pattern, investors presentation, information on material events etc., are periodically filed in accordance with the SEBI Listing Regulations on BSE Listing and NSE electronic application processing system (NEAPS) portals. The financial results of the Company (quarterly and annually) are published in leading newspapers namely Financial Express, Navshakti and other leading newspapers Various investor relation activities such as analyst briefings, conference calls, global investor road shows, presentation on financials, discussion on Company strategy and development. etc. are undertaken by the senior management team and the Chief Investor Relations Officer
GENERAL SHAREHOLDERS INFORMATION
i. Date , Time and Venue of the 32nd Annual General Meeting
The 32nd Annual General Meeting of the Company will be held on Wednesday, July 20, 2016 at 12.00 noon at Exchange Plaza, National Stock Exchange Auditorium, Ground Floor, Bandra Kurla Complex, Bandra (East) Mumbai - 400 051.
ii. Financial Year
The financial year of the Company is April to March.
iii. Dividend Payment date
The final dividend, if declared, by the shareholders at the ensuing Annual General Meeting shall be paid within 30 days from the date of declaration.
iv. Name and address of the Stock Exchanges on which the securities i.e. Equity and Debentures of the Company are listed
National Stock Exchange of India Ltd.(NSE)
Exchange Plaza, Bandra - Kurla Complex, Bandra (East), Mumbai 400 051.
Stock Code - DHFL
BSE Limited (BSE)
Phiroze Jeejebhoy Towers Dalal Street, Fort, Mumbai 400 001 Stock Code - 511072
The Annual Listing fees has been paid to both the Stock Exchanges for Financial year 2016-17.
v. ISIN Number for Equity Shares in NSDL & CDSL : INE 202B01012
vi. Date of Book Closure
Tuesday, July 12, 2016 to Wednesday, July 20, 2016 (both days inclusive)
Registrar and Share Transfer Agent
For Equity Shares
Link Intime India Private Ltd. C - 13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai-400078 Phone : 022-2594 6970 – 78, Fax : 022-25946969, e-mail : email@example.com Contact Person: Mr. Mahesh Masurkar Executive – Corporate Registry
M/s. System Support Services 209, Shivai Industrial Estate, 89, Andheri-Kurla Road, (Next to Logitech Park, Above McDonalds), Sakinaka, Andheri (E), Mumbai – 400072 Tel : 91-22-28500835 (5 lines) Fax : 91-22-28501438 e-mail : firstname.lastname@example.org Contact Person: Mr. Mahendra Mehta
x. Secretarial Audit for Financial Year 2015-16
Mrs. Jayshree S. Joshi, Proprietress of M/s Jayshree Dagli & Associates, Practicing Company Secretaries, Mumbai, was appointed as a Secretarial Auditor to conduct Secretarial Audit of the Company for the financial year ended March 31, 2016 as per the provisions of Companies Act, 2013. The Secretarial Audit Report addressed to the Board of Directors of the Company forms part of this Annual Report.
xi. Share Transfer System
In terms of Regulation 40 (2) of SEBI Listing Regulations, the Board of Directors have delegated the power to attend all the formalities relating to transfer of securities to the Registrar & Share Transfer Agent (RTA) pursuant to which the RTA reports on transfer of securities to the Board of Directors in each Board Meeting.
All activities in relation to both physical share transfer facility (includes transmission/ splitting and consolidation of share certificates/dematerialization /rematerialization) is processed periodically by the Registrar & Share Transfer Agent (RTA) of the Company. The Stakeholders' Relationship Committee is updated quarterly on the details of shares transferred/transmitted etc. as received from the RTA. In case, of shares held in electronic form, the transfers are processed by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) through their respective Depository Participants.
The Company also obtains a certificate of compliance with the share transfer and other related formalities within the stipulated time period, from a Practicing Company Secretary, as required under Regulation 40(9) of the SEBI Listing Regulations and files a copy of the same on half yearly basis with the Stock Exchanges.
Dematerialization of Shares and Liquidity
The Company's equity shares are in the list of compulsory demat settlement by all the investors. As on March 31, 2016, 99.56% of the total issued share capital of the Company representing 29,05,09,396 equity shares were held in dematerialized form and the balance 0.44% representing 12,88,592 equity shares were held in physical form by the shareholders of the Company.
The shares of the Company are frequently traded on both the Stock Exchanges.
xv. Outstanding GDR or ADR or warrants or Convertible instruments, conversion date and likely impact on equity.
As at March 31 2016, the Company does not have any outstanding GDR or ADR.
However, during the financial year 2015-16, the Members of the Company vide a special resolution, approved the issuance of warrants convertible into equivalent number of equity shares of Rs. 10 each (in one or more tranches) on preferential basis to the Promoter Group entity i.e. M/s Wadhawan Global Capital Private Limited ("WGC") up to an amount of Rs. 200 crore.
The Allotment Committee of the Board at its meeting held on March 11, 2016, allotted 2,12,30,070 warrants at an Issue Price of Rs. 232.212 per warrant [i.e. at a premium of 2% to the minimum price calculated as per SEBI (ICDR) Regulations], convertible into equivalent number of equity shares of Rs. 10/- each to WGC, upon receipt of 22% of the issue consideration.
The equity shares shall be allotted by way of conversion of warrants on receipt of balance 72% of the total issue consideration, in one or more tranches, within a period of eighteen (18) months from the date of allotment of warrants.
Upon conversion of all the warrants into equity shares of the Company, by WGC the paid up equity share capital of the Company shall increase by 2,12,30,070 number of equity shares.
xvi. Commodity price risk or foreign exchange risk and hedging activities
The Company is not exposed to any commodity price risk. However, the Company has made borrowings in the form of External Commercial Borrowings (ECBs) and has managed its associated foreign exchange risk and hedged the same to the extent necessary. It entered into Principal/Interest rate Swap transactions for hedging foreign exchange risk. The details of the foreign currency exposure are disclosed at Note No. 6 of the annual (standalone) financial statements.
xvii. Listing of Debt Securities
The secured debentures issued by the Company (includes those issued by amalgamated Company viz. First Blue Home Finance Ltd.) on private placement basis are listed in the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Limited and BSE Ltd, respectively. GDA Trusteeship Limited and IDBI Trusteeship Services Limited act as the debenture trustees for the debentures issued by the Company. The Company is in compliance with the regulations as set out in Chapter V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2012.
xviii.Redressal of Investor Grievances through SEBI Complaints Redress System (SCORES)
SCORES is a web based centralized grievance redressal system of SEBI that enables the investors to lodge, follow up and track the status of redressal of complaints online. The investor complaints are processed in a centralized web based complaints redressal system. The Company is registered with SEBI Complaints Redress System (SCORES) and ensures to file Action Taken Report under SCORES well within the prescribed timeframe.
xix. Address for Correspondence
Correspondence relating to grievances in relation to non receipt of annual report, dividend and share certificates sent for transfer etc., should be addressed to email@example.com Further any requests/ intimation regarding change in address, issue of duplicate share certificates, change in nomination etc may also be sent to the same email address for its quick redressal or you may write to the Secretarial team at the correspondence mentioned hereinafter:
Members holding shares in electronic form may please note that instructions regarding change of address, bank details, nomination, email address and power of attorney should be given directly to their respective Depository Participant. Members holding shares in physical form may please note that instructions regarding change of address, bank details, nomination, email address and power of attorney should be given to the Company's RTA viz. Link Intime India Private Limited.
The investors have the facility to post any query to a dedicated email id for investors i.e. firstname.lastname@example.org which are acted upon within 24 hours of receipt of query.
Correspondence address of Debenture Trustees are as below :
GDA Trusteeship Limited IDBI Trusteeship Services Limited
GDA Trusteeship Limited (formerly GDA Trustee & Consultancy Limited) GDA House, 94/95, Plot No. 85, Bhusari Colony, (Right) Paud Road, Pune – 411 038 Telephone No. 020-25280081 Fax No. 020 – 25280275 e-mail : email@example.com Website : www.gdatrustee.com
IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R Kamani Marg, Ballard Estate Mumbai – 400 001. Telephone No – 022 4080 7000 Fax No. – 022 6631 1776 / 4080 7080 e-mail : firstname.lastname@example.org, email@example.com Website : www.idbitrustee.com
Disclosures on materially significant related party transactions that may have potential conflict with the interests of the Company at large
There were no materially significant related party transactions i.e. transactions of material nature, with the promoters, directors or senior management, or their relatives etc., that may have potential conflict with the interest of the Company at large. Transactions entered with related parties as defined under the Companies Act, 2013 and SEBI Listing Regulations during the financial year were largely in the ordinary course of business and on an arm's length pricing basis. Suitable disclosure as per the requirements of Accounting Standard 18 has been disclosed at Note No. 41 of the Notes forming part of the audited (standalone) financial statements annexed herewith
The Company has in place a Board approved Related Party Transaction Policy which defines the materiality of related party transactions and lays down the procedures of dealing with Related Party Transactions.
The approval of the Board of Directors, as applicable, is obtained by the Company before entering into any related party transaction. However, prior approval of the Audit Committee is obtained for entering into all related party transactions. A quarterly update is also given to the Audit Committee and the Board of Directors on the related party transactions undertaken by the Company with their respective approvals, for their review and consideration.
During the year, the Company has not entered into any material related party transaction as defined under SEBI Listing Regulations.
The Related Party Transaction Policy of the Company is uploaded on the Company's website and is available on URL: <http://www.dhfl.com/investors/> policies-codes/related-party-transaction-policy
ii. Details of non-compliance by the Company, penalties and strictures imposed on the Company by Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets, during the last three years.
The Company has complied with all the applicable requirements of Capital Markets and no strictures or penalties were imposed on the Company by the Stock Exchanges or SEBI or any other statutory authority, on any matter relating to capital market, during the last three years.
iii. Details of establishment of Vigil Mechanism, Whistle Blower Policy and affirmation that no personnel has been denied access to the Audit Committee.
The Company has a duly adopted Whistle Blower Policy and established a vigil mechanism in line with the provisions of SEBI Listing Regulations and Companies Act, 2013, which aims to provide a mechanism to the employees and directors of the Company to report instances of unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. It also provides for adequate safeguards against victimization of Directors and employees who avail the mechanism and provides for direct access to the Chairman of the Audit Committee, in exceptional cases.
It is affirmed that no personnel has been denied access to the Chairman of the Audit Committee during the financial year 2015-16.
iv. Code of Conduct for the Board of Directors and Senior Management Personnel
The Company has a duly approved Code of Conduct for the Board of Directors and Senior Management Personnel of the Company in place in terms of the requirements of SEBI Listing Regulations. The subject Code identifies and lists out various elements of commitment, duties and responsibilities that serves as a basis for taking ethical decision-making in the conduct of day to day professional work. The Code requires the Directors and employees to act honestly, ethically and with integrity and in a professional and respectful manner. The Board of Directors and members of the senior management personnel have provided their affirmation to the compliance with this code. A declaration regarding compliance by the Board of Directors and the Senior Management Personnel with the said Code of Conduct duly signed by the Chief Executive Officer forms part of this Annual Report.
The said code has been posted on the Company's website and is available at URL: <http://www.dhfl.com/> investors/policies-codes/code-of-conduct-for-board-and-senior-management-personnel/
v. CEO /CFO Certification
The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) provides a certification on quarterly/ annual basis to the Audit Committee and Board of Directors in terms of Regulation 17 (8) and Regulation 33 (2) (a) of the SEBI Listing Regulations.
vi. Auditors Certificate on Corporate Governance
M/s. T. R. Chadha & Co. LLP (FRN: 06711N/N500028) & M/s. Rajendra Neeti & Associates (FRN: 006543C), Chartered Accountants, Mumbai, Joint- Statutory Auditors of the Company have certified that the Company has complied with the conditions of Corporate Governance as stipulated under SEBI Listing Regulations. The said certificate forms part of the Annual Report as an Annexure to the Board's Report.
vii. Details of compliance with Mandatory requirements and adoption of non mandatory requirements
During the financial year 2015-16, the Company has complied with all mandatory requirements as specified in the SEBI Listing Regulations. The Company has adopted the below specified non-mandatory requirements in terms of Regulation 27(1) of SEBI Listing Regulations:
1. Modified Opinion in Audit Report
During the year under review, there was no audit qualification in the Auditors' Report on the Company's financial statements. The Company continues to adopt best practices to ensure a regime of financial statements with unmodified audit opinion.
2. Separate posts of Chairman and Chief Executive Officer
The Company has an Executive Director acting as the Chairman & Managing Director and has appointed a separate person as the Chief Executive Officer (designated as a Key Managerial Personnel) of the Company.
3. Reporting of Internal Auditor
The Company has an internal audit department, which is headed by a Senior Management Personnel, a qualified Chartered Accountant, who is responsible for conducting independent internal audit of branches/ clusters/ circles & other offices and head office functions of the Company. The Internal Audit Head reports directly to the Audit Committee of the Board.