1. LEASES

Operating Lease

The company has taken certain premises for office and residential use for its employees under cancellable and non cancellable operating lease agreements. Terms of the lease include terms for renewal, increase in rents in future periods and terms of cancellation. The total lease rent recognized as an expense during the year under the lease agreements amounts to Rs, 5,039 Lakh (Rs, 3,893 Lakh).

2. Two subsidiaries of the Company were amalgamated into the company pursuant to the Scheme of amalgamation (Scheme) under Sections 391 to 394 of the Companies Act, 1956 approved by the Board of directors of all the three companies and sanctioned by the HonRs,ble High Court of judicature at Bombay vide its order dated July 27, 2012 and by the Hon’ble High Court of judicature at Delhi vide its order dated January 4, 2013 which were filed with the Registrar of Companies on January 31, 2013 being the effective date for the amalgamation scheme. In terms of the above scheme, the Assets and Liabilities of the subsidiary companies were amalgamated with DHFL at their respective fair value in the earlier years. Proportionate Fair value appreciation surplus amounting to Rs, 2,451 Lakh (Rs, 5,110 Lakh) has been amortized out of the Capital Reserve and Rs, 2,826 Lakh (Rs, Nil) has been amortized out of the General Reserve in terms of the valuation report of the scheme.

3. The Company operates under the principal business segment viz. "Providing loans for construction or purchase of residential property and loans against property”. Further, the Company is operating in a single geographical segment. Accordingly disclosures relating to primary and secondary business segments under the Accounting Standard on ‘Segment Reporting’ (AS 17) notified u/s 133 of the Companies Act, 2013 are not applicable to the Company

4. Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) is Rs, 4,007 Lakh (Rs, 8,380 Lakh).

5. Income Tax assessment of the Company has been completed upto Assessment Year 2015-16. Company has made rectification applications to Income Tax Authorities to rectify certain errors in assessment orders which are apparent from the records. Subject to such rectifications, there are no demands for which company is contingently liable.

6. Contingent Liability in respect of undertaking provided by the Company for meeting the shortfall in collection, if any, at the time of securitization of receivables outstanding as at March 31, 2018 amounting to Rs, 28,608 Lakh (Rs, 34,067 Lakh). The outflows would arise in the event of short collections, in the cash inflows of the pool of securitized receivables.

7. In the previous financial year, the Board of Directors at its meeting held on February 14, 2017 and Shareholders of the Company on March 17, 2017 approved the sale of investments in DHFL Pramerica Life Insurance Company Limited ("DPLI”) to its Wholly

Owned Subsidiary i.e. DHFL Investments Limited ("DIL”) at the fair market value determined by an internationally reputed actuarial consultants. Post receipt of the applicable approvals from Insurance Regulatory and Development Authority of India, Competition Commission of India and Reserve Bank of India, the equity shares in DPLI were sold to DIL at fair market value of Rs, 200,050 Lakh determined by internationally reputed actuarial consultants. Gain of Rs, 196,943 Lakh arising on sale of investments has been considered as exceptional item.

* Certification and other matters includes Rs, Nil (Rs, 72 Lakh) paid towards fees for public issue of Secured Non-Convertible Debentures (NCDs) and utilised out of Securties Premium account over a period of NCDs.

8. RELATED PARTY TRANSACTIONS

As per Accounting Standard on ‘Related Party Disclosures’ (AS 18) details of transactions with related parties as defined therein are given below:

A) List of related parties where control exists:

(i) Subsidiaries

a. DHFL Advisory & Investments Pvt Limited

b. DHFL Investments Limited

B) List of related parties with whom transactions have taken place during the year and relationship:

(ii) Joint Ventures

a. DHFL Pramerica Life Insurance Company Limited (upto March 31, 2017)

b. DHFL Pramerica Asset Managers Pvt Limited

c. DHFL Pramerica Trustees Pvt Limited

(iii) Associate Companies

a. Avanse Financial Services Limited

b. DHFL Venture Trustee Company Pvt Limited

c. Aadhar Housing Finance Limited (Formerly known as DHFL Vysya Housing Finance Limited)²

d. Aadhar Housing Finance Limited (erstwhile)⁽¹⁾

(iv) Enterprises over which KMPs are able to exercise significant influence

a. Arthveda Fund Management Pvt Limited

b. Wadhawan Holdings Pvt Limited

c. Dish Hospitality Pvt Limited

d. WGC Management Services Pvt Limited

e. Wadhawan Sports Pvt Limited

f. Essential Hospitality Pvt Limited

g. DHFL General Insurance Limited (w.e.f.November 1, 2017)

h. DHFL Changing Lives Foundation (w.e.f. December 1, 2017)

i. DHFL Pramerica Life Insurance Company Limited (w.e.f. April 1, 2017)

(v) Key Management Personnel

a. Mr. Kapil Wadhawan Chairman & Managing Director

b. Mr. Harshil Mehta Joint Managing Director & Chief Executive Officer

c. Mr. Santosh Sharma Chief Financial Officer

(vi) Relatives of Key Managerial Personnel

a. Mr. Dheeraj Wadhawan

b. Mrs. Aruna Wadhawan

Notes

1) Related party relationship is as identified by the Company and relied upon by the Auditors.

2) The figures of income and expenses are net of applicable taxes.

3) Transactions with the related parties are disclosed only till the relationship exists.

4) Previous years figues have been regrouped, rearranged and reclasified wherever necessary

5) Term loans from banks and loans from NHB are further guaranteed by personal guarantees of Mr. Kapil Wadhawan and Mr. Dheeraj Wadhawan.

6) Loans from NHB are further guaranteed by personal guarantee of Mrs. Aruna Wadhawan and Corporate Guarantee of Wadhawan Global Capital Pvt Limited.

7) * Others includes Enterprises over which KMP are able to exercise significant influence.

8) Managerial remuneration excludes the contribution for gratuity as the incremental liability has been accounted by the Company as a whole.

9) There are no provisions for doubtful debts or amount written off or written back for debts due from or due to related parties.

9.EMPLOYEE BENEFIT PLANS

Both the employees and the Company make pre-determined contributions to the Provident Fund. Amount recognized as expense amounts to ' 1,281 Lakh, (' 1,033 Lakh).

The Company provides for gratuity, a defined benefit plan (the Gratuity Plan), to its employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and years of employment with the Company. The Company has employees’ gratuity fund managed by the Life Insurance Corporation of India and Canara HSBC.

The details of post retirement benefits for the employees (including Key Management Personnel) as mentioned hereunder are based on the above report as provided by Independent Actuary as mentioned above and relied upon by the Auditors.

The estimates of rate of escalation in salary considered in actuarial valuation, take into account inflation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certified by the actuary.

10. As required by the revised guidelines dated February 9, 2017 by NHB, read with additional requirement/guidelines with reference to the interpretation of various terms/classifications, in computing the above information, certain estimates, assumptions and adjustment have been made by the Management which have been relied upon by the Auditors, the following additional disclosures are given as under:

11. Exchange Traded Interest Rate (IR) Derivative

The company has not entered into any exchange traded Interest rate Derivative during the financial year 2017 -2018.

12. Disclosures on Risk Exposure in Derivatives

A Qualitative Disclosure

Financial Risk Management of the Company constitutes the Audit Committee, Asset Liability Committee (ALCO), Risk management and hedging team (front office), mid office, back office and internal auditors. The Treasury front-office enters into derivative transactions with various counterparties. The Company has an independent back-office and mid-office. The Company periodically monitors various counterparty risk and market risk limits, within the risk architecture and processes of the Company. The Company raises funds overseas through foreign currency borrowings through instruments such as ECBs, Foreign Currency Term Loans or other instruments as permitted under the regulations of Government of India and the Regulators from time to time. The Company may also import goods and services resulting into related foreign currency exposures at different times. In such scenario, the Company is exposed to Exchange Risk, which is required to be managed effectively

The Company is also be exposed to interest rate risk, which arises from the maturity mismatching of foreign currency positions.

Foreign Exchange Exposures can be classified into three broad categories depending upon the nature of exposure:

- Transaction Exposure

- Translation Exposure

- Operating Exposure

For mitigation of risks owing to foreign exchange exposure, the Company uses techniques from among the following tools, often substitutes, available for hedging of foreign exchange risk:

- Forwards

- Options

- Futures

- Swaps

- Money Market Hedge

- Rollover Contracts

3. Registration obtained from other financial sector regulators

a) The Company has obtained a Coporate Agent (Composite) license bearing registration no. CA0052 from insurance Regulatory and Development Authority of India (IRDAI).

b) Other Registration with:

i) Financial Intelligence Unit, India (FIU) vide Registration No. FIHFC00010

ii) Association of Mutual Funds in India (AMFI) vide registration no. ARN-101515, as AMFI Registered Mutual Fund Advisor.

14. No penalty has been levied on the company by NHB and other regulators.

15. Revenue Recognition

During the year there were no revenue recognition which has been postponed pending the resolution of significant uncertainities.

16. There was no draw down from the Statutory/Special Reserve during the year.

17. The Company does not have any overseas assets.

18. The Company does not have any sponsored SPVs which needs to be consolidated as per Accounting norms.

19. Figures for the previous year have been regrouped, rearranged and reclassified wherever necessary. Figures in brackets represent previous