The correct option is
D No improvement
The clause, "Hardly had he reached home" is a time clause in past perfect sentence. The word, "hardly" is an adverb which is used to indicate one event happening immediately after another. There are a couple of ways of re-stating this sentence as given below:
(i) "He had only just reached home when the telephone rang";
Or
(ii) He had hardly reached home when the telephone rang".
"Hardly" is a negative word. When a sentence begins with this word, we use inversion i.e the subject (he) follows the auxiliary, "had" i.e "Hardly had he" instead of "He had hardly". In option A, the subject (he) precedes the auxiliary (had). Hence, this is incorrect.
Option B: The clause, "Hardly did he reach home" is ungrammatical and not used.
Option C: The underlined words are in past perfect tense. They cannot be replaced by "he reached", which is in simple past tense. Hence, this is incorrect.
Option D is correct as none of the options indicated can substitute the given sentence.