Corporate Governance

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.

Company’s philosophy on Code of Governance

The Company considers the compliance with Corporate Governance as a process towards establishing and maintaining the principles of integrity, transparency, accountability and fairness and not a mere adherence to a regulatory framework. The Company has always practiced Corporate Governance on a voluntary basis rather than as an obligation. The Company on a continuous basis assesses its strengths and weaknesses so as to achieve the best standards of Corporate Governance while on the path of protecting the long term interest of the shareholders, customers, depositors, creditors and employees. The Company is conscious of the reputation it carries amongst its customers and public at large and is continuously striving to provide good management, to adopt prudent risk management techniques and to comply with the required standards of capital adequacy. The Company has implemented the principles of Corporate Governance in all its dealings and activities and it is fully supported and endorsed by all the Directors and senior management personnel so as to sustain a cooperative, competent, positive, harmonious and productive work atmosphere and business organization.

The Board of Directors

Directors of DHFL possess high degree of professional ethics, integrity and values and are committed to representing the long term interest of the stakeholders. The basic responsibility of the Board is to provide effective governance over the Company’s affairs exercising its reasonable business judgment on behalf of the Company. The Company’s business is conducted by its employees under the direction of the Vice Chairman & Managing Director and Chief Operating Officer (COO) and the overall supervision of the Board, to enhance the long term value of the Company for its stakeholders. In order to ensure effectiveness of the Board, various powers and responsibilities have been delegated to the Committees of the Board of Directors.

DHFL’s 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.

Composition and size of the Board

As on 31st March, 2007, the Board of Directors comprised of eight members, including seven non-executive Directors and a Whole-time Managing Director. The Managing Director is the only executive Director on the Board. The goal has been to achieve an optimum combination of Executive and Non-Executive Directors as well as independent directors so that the Board is cohesive and has the expertise for quick and informed decision making. As the Chairman of the Board is non-executive, the criterion of one-third of the Board consisting of independent Directors is fulfilled. The Members of the Board of Directors are drawn from diverse fields, such as finance, banking, insurance, administration and economics. Out of the seven non-executive Directors, five are independent Directors. The Directors are elected based on their qualification, experience in varied fields as well as the Company’s business needs. Shri Rakesh Kumar Wadhawan is the Chairman of the Board and Shri Kapil Wadhawan is the Vice Chairman and Managing Director. Considering the consistent efforts of Shri Kapil Wadhawan in transforming DHFL into one of the most influential housing finance institutions in India, he has been re-designated as Vice-Chairman and Managing Director w.e.f. 25th January, 2007.

Board Meetings and Attendance

The Board of Directors meets atleast once a quarter to take on record and approve quarterly/annual financial results and to review the compliance reports prepared by the Company. Additional meetings are held as and when necessary. The Company Secretary prepares the agenda for the meetings in consultation with the Chairman and
Vice Chairman & Managing Director. The agenda, management report and other explanatory notes along with the performance of the subsidiary company are circulated to the directors in advance of the Board meetings. The members of the Board have full access to the information and records of the Company and are free to recommend any matter for inclusion in the agenda. The senior executives of the Company are also invited to the Board Meetings for their additional inputs as when required. A representative of Caledonia Investments Plc is also invited to attend the Board Meetings as an Investor Observer.

All the significant activities and transactions of the Company are regularly notified and reported to the Board. The minutes of all the Committee meetings are also placed during every 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 opportunity to review decisions/agenda items considered earlier. 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:

Directorships & Committee Positions held by the Directors

In accordance with the Clause 49 of the Listing Agreement, none of the Directors is a member in more than 10 Committees or is acting as a Chairman of more than 5 Committees across companies in which he is the Director. It is to be noted that Clause 49 excludes the private 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.

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.

Terms of Reference

The Audit Committee of the Company is formed primarily to monitor and supervise the Company’s 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.


• To examine all taxation matters, including related legal cases and
  the Company’s 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.

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 year-
on 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 Company’s accounts and other related matters. The attendance of the Directors in the Committee Meetings is as follows:

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 reporting systems, related party transactions records and ensured that 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.

Composition

• To borrow funds for the purpose of the Company’s 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.
• 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.

The Finance Committee held 15 meetings during the year. The attendance of the Directors in the Committee Meetings is:

Terms of reference

The terms of reference of the Remuneration and Compensation Committee includes the recommendation of annual remuneration and the periodic increments payable to the Executive Director(s) which is further approved by the Board. The Committee is also empowered to recommend to the Board the appointment/ reappointment of the executive/ non-executive Directors, the induction of Board members into various Committees. The Committee also ensures that the overall remuneration payable to the Directors does not exceed the limits prescribed by the Companies Act, 1956 and is within the limits approved by the shareholders.

The Remuneration Committee was renamed as ‘Remuneration and Compensation Committee’ w.e.f. 15th May, 2006 in accordance with the SEBI (Employee Stock Option Scheme) Guidelines and was entrusted with the following additional responsibilities:

• Framing of the ESOS Scheme
• Administration of the Scheme
• Exercise of control over the implementation of the Scheme.
• Preparation of the Offer Document to disclose the various details of the Scheme to the option grantees.
• Appointment of intermediaries required for the Scheme.
• Any other matter relating to administration of the Scheme.

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.

The Shareholders’/ Investors’ Grievances Committee was constituted in order to redress the complaints of the shareholders and investors, related to transfer and transmission of shares, non-receipt of annual reports, dividends and other share related matters. The Committee also notes the requests to the Registrar and Share Transfer Agent made by the shareholders relating to transfer, transmission, consolidation, and replacement of share certificates, issue of duplicate certificates and dematerialization of share certificates. The Committee also reviews the certificates and reports submitted to the Stock Exchanges under the Listing Agreement/ SEBI Regulations. The Committee also observes the quarterly status of the number of shares in physical as well as dematerialized form. The Committee also reviews the periodicity and effectiveness of the share transfer process, statutory certifications, depository related issues and activities of the Registrar and Transfer Agent.

The Committee consists of two members: Shri Waryam Singh, an Independent Director (Chairman of the Committee) and Shri Kapil Wadhawan, Vice Chairman & Managing Director as the member. Shri S. Y. Sankhe, Company Secretary is the Compliance Officer.
The Company received 127 complaints during the year ended 31st March, 2007. All the complaints were resolved to the satisfaction of the shareholders. There were no share transfer requests pending as at 31st March, 2007.
During the year ended 31st March, 2007, the Committee held four meetings to review the shareholders’/ investors’ correspondence including redressal of their grievances.

The attendance in the four Committee Meetings is as follows:

Employees Stock Option Scheme

At the Annual General Meeting of the Company held on 17th July, 2006, the members had approved the issue of equity stock options under a Scheme tilted "DHFL Employee Stock Option Plan-2006" in accordance with the regulations of Securities and Exchange Board of India (SEBI). As on 31st March, 2007, the Company has not granted any options to any of its employees. Hence the disclosure requirements as specified in the SEBI Guidelines are not applicable to the Company.

General Body Meetings
Details of the previous three Annual General Meetings (AGM) and the Extra-Ordinary General Meeting (E.G.M) are as follows:

Special Resolutions passed at the previous three AGMs/EGM

22nd AGM:

• Payment of remuneration in the form of Commission to Directors other than Managing Director and Whole-Time Directors.
• Issue of equity stock options, under the Employee Stock Option Scheme, convertible into equity Shares of the aggregate nominal face value, not exceeding in aggregate1% of the subscribed and paid up Equity Share Capital as on 31st March, 2006.

EGM:

• Increase and reclassification of the Authorized Share Capital.
• Issue of Optionally Convertible Preference Share Capital to Foreign Investor.
• Issue of Convertible Warrants to the Promoter Group.
• Issue of Redeemtable Preference Shares.
• Adoption of new set of Articles of Association.
• Granting of certain rights and privileges to Foreign Investors under Regulation 12 of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.

21st AGM:

• Keeping the Register and Index of Debenture holders at the office of M/S System Support Services.
• Issue of Foreign Currency Convertible Bonds.
• Reclassification of authorized capital by cancellation of unissued preference shares and alteration of Articles.

20th AGM:

• Keeping the various Registers at a place other than the Registered Office of the Company.
• Re-classification of the authorized share capital of the Company
• Issue of shares on a right basis.

Postal Ballot

During the financial year ended 31st March 2007, the shareholders have not passed any ordinary or special resolution by way of postal ballot.

Disclosures



There are no materially significant related party transactions entered into by DHFL with its Promoters, Directors or Management, their subsidiaries or relatives, etc. that may have potential conflict with the interest of the Company at large. Transactions with the related parties are disclosed in Note B-13 of Notes to Accounts.


Related Party Transactions

Related Party Transactions with Subsidiaries, Associate companies, Key Managerial Personnel and others is given in the Note B- 13 of Schedule R of the Balance Sheet.


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.


Risk Management


The Company has established risk assessment and minimization procedures, which are reviewed by the Board and the Audit Committee periodically. A detailed report on Risk Management is included in the report on Management Discussion and Analysis.


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.


Code for prevention of insider trading practices


In compliance with the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations 1997, as amended till date on Prohibition of Insider Trading, the Company has a comprehensive code of conduct and the same is being strictly adhered to by its management, staff and relevant business associates. The code expressly lays down the guidelines and the procedures to be followed and disclosures to be made, while dealing with shares of the Company and cautioning them on the consequences on non compliance thereof. The Company follows quiet periods (closure of trading window) prior to the publication of price sensitive information. During the period, the Company has set up a mechanism where the management and relevant staff and business associates of the Company are informed about the same and are advised not to deal in Company’s securities.


Know Your Customer and Anti-MoneyLaundering Standards


The Company has formulated a code on ‘Know Your Customer and Anti-Money Laundering Standards’ in accordance with the guidelines issued by National Housing Bank. The policy lays down 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


Fair Practices Code


The Company has formulated a policy on Fair Practices Code in accordance with the ‘Guidelines on Fair Practices Code for Housing Finance Companies (HFCs)’ issued by National Housing Bank which is designed to assist both the Company and the consumer and is applicable to all the products and services offered by the Branches across the counter, over the phone, by post, through interactive electronic devices, on the internet or by any other method. The Code specifies various guidelines regarding the strategies relating to marketing and advertising and to ensure disclosure and transparency in dealing with the customers. The Code also proposes the various tactics to be used by the Company during the process of collection of dues and the various alternatives that are available to the customers in case the customers are not satisfied with the services offered by the Company.


Details of non-compliance by the Company


During the last three years, there were no strictures or penalties imposed by either the Securities and Exchange Board of India or the Stock Exchange/s or any statutory authority for non compliance of any matter related to the capital markets.


Re-appointment of Directors


According to the Articles of Association, one-third of the Directors are liable to retire every year and, if eligible, offer themselves for re-appointment at every Annual General Meeting. Consequently, Shri Waryam Singh and Shri G. P. Kohli would retire this year and being eligible, offer themselves for re-appointment.


CEO/ CFO Certification


The CEO and CFO Certification of the financial statements and the cash flow statement for the year is obtained and was placed before the Baord.


Means of Communication



The main channel of communication with the shareholders is through the Annual Report which includes Director’s 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.

General Shareholder Information

Twenty - Third Annual General Meeting	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
Financial Reporting Calendar : 2007-08	1st of April to 31st March 1st of April to 31st March Second Quarter - By last week of October Third Quarter - By last week of January Results for the year - May/June
Dates of Book Closure	Monday 16th July, 2007 to Monday, 23rd July, 2007 (both days inclusive)
Dividend Payment dates	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.
Listing on Stock Exchanges	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
ISIN Number for NSDL & CDSL	INE-202B01012

Management Discussions and Analysis

A detailed report on Management Discussions and Analysis is included in the Annual Report.

Non Mandatory Requirements

Market Price Data

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

Performance – Comparison with BSE Sensex

Distribution of Shareholding as on 31st March, 2007

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

Registrar and Share Transfer System

All the applications regarding physical transfer, transmission, splitting of share certificates, dematerialization and rematerialzation are processed by the Registrar and Share Transfer Agents, ‘Intime Spectrum Registry Limited’ and approved by the Managing Director periodically depending on the volume of transfers. Share Certificates are dispatched within the time prescribed under the Listing Agreement/SEBI Guidelines.

Dematerialization of Shares and Liquidity

As on 31st March, 2007, 93.45% of the share capital of the Company representing 4,68,39,704 equity shares were held in dematerialized form and the balance 6.55% representing 32,82,815 equity shares were held in physical form.

Outstanding GDRs/ADRs/ Warrants or any convertible instruments

The Company has issued 70,65,456 Optionally Convertible Preference Shares of face value Rs. 25/- each at a premium of Rs. 50/- each, aggregating to Rs. 52,99,09,200/- to M/s. Caledonia Investments Plc, U.K. with an option to the Investor, to be converted into 70,65,456 equity shares bearing a face value Rs. 10/- each and a premium of Rs. 65/- per share, after 13 months but before 18 months from the date of allotment . The Company has also allotted 33,35,000 Convertible Warrants of Rs. 75/- each, aggregating to Rs. 25,01,25,000/- on a preferential basis, to M/s. Wadhawan Holding Private Limited, Promoter Group, which shall, at the option of warrant holders, be converted into 33,35,000 equity shares of Rs. 10/- each at a premium of Rs. 65/- per share, after 13 months but before 18 months from the date of allotment of the said warrants.

Listing of Debt Securities

Pursuant to the directions of Securities & Exchange Board of India (SEBI) all the secured debt securities issued by the Company on private placement basis have been listed in the Wholesale Debt Market (WDM) Segment of the National Stock Exchange of India Limited. The company complies with the listing requirements in this regard.

Investor Correspondence

Shareholders may also contact the following for any assistance:

Shareholders holding shares in electronic mode should address all their correspondence through their respective Depository Participants.

Transfer of unclaimed dividend to Investor Education and Protection Funds

Pursuant to provisions of Section 205A(5) of the Companies Act, 1956, dividend which remains unpaid or unclaimed for a period of seven years from the date of its transfer to unpaid dividend account is required to transferred by the Company to the Investor Education and Protection Fund (IEPF), established by the Central Government under the provisions of Section 205C of the Companies Act, 1956. Shareholders are advised to claim the unclaimed dividend lying in the unpaid dividend account of the Company between the due dates of declaration of dividend and corresponding dates when unclaimed divided are due for transfer to IEPF. Information in respect of such unclaimed dividend for the three years when due for transfer to the said Fund is given below :

Auditors' Report On Corporate Governance To the Members,
To the Members,
Dewan Housing Finance Corporation Ltd.

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.

DECLARATION REGARDING COMPLIANCE BY BOARD MEMBERS AND SENIOR MANAGEMENT PERSONNEL WITH THE COMPANY’S 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.

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