Housing Development Finance Corporation Ltd.

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You can view the entire text of Notes to accounts of the company for the latest year

ISIN No INE001A01036 Market Cap. ( in Cr. ) 369431.20 P/BV 3.34 Book Value ( ) 640.98
BSE Code 500010 52 Week High/Low ( ) 2358/1645 FV/ML 2/1 P/E(X) 22.76
NSE Code HDFCEQ Book Closure 02/08/2019 EPS ( ) 94.08 Div Yield (%) 0.98
Year End :2018-03 

31. Exceptional items:

During the year, the Corporation has offered 19,12,46,050 equity shares of Rs, 10 each of HDFC Standard Life Insurance Company Limited (HDFC Life), a material subsidiary representing 9.52% of its issued and paid-up share capital in the initial public offering of HDFC Life, resulting in a profit of Rs, 5,256.59 crore (net of expenses).

In accordance with past practice and with the objective of further strengthening the Corporation's balance sheet, the Corporation has made an additional provision of Rs, 1,575 crore to shore up the Provision and Contingencies Account and thereby recognise provisions towards specific loans against future risks.

The transaction has triggered the provision of Minimum Alternate Tax under section 115JB of the Income-tax Act, 1961. The tax expense has been adjusted accordingly.

32. In accordance with the Accounting Standard (AS) 20 on 'Earnings Per Share':

(i) In calculating the Basic Earnings Per Share, the Profit After Tax of Rs, 12,163.69 crore (Previous Year Rs, 7,442.64 crore) has been adjusted for amounts utilised out of Shelter Assistance Reserve of Rs, 175.05 crore (Previous Year Rs, 146.27 crore).

Accordingly the Basic Earnings Per Share has been calculated based on the adjusted Profit After Tax of Rs, 11,988.63 crore (Previous Year Rs, 7,296.37 crore) and the weighted average number of shares during the year of Rs, 160.22 crore (Previous Year Rs, 158.34 crore).

34. Amalgamation of Grandeur Properties Pvt Ltd, Haddock Properties Pvt Ltd, Pentagram Properties Pvt Ltd, Windermere Properties Pvt Ltd, Winchester Properties Pvt Ltd with the Corporation

The National Company Law Tribunal, Mumbai Bench approved the merger of erstwhile Grandeur Properties Pvt Ltd (eGPPL), erstwhile Haddock Properties Pvt Ltd (eHPPL), erstwhile Pentagram Properties Pvt Ltd (ePPPL), erstwhile Windermere Properties Pvt Ltd (eWPPL), erstwhile Winchester Properties Pvt Ltd (eWtPPL) (Transferor Companies) into and with the Corporation vide its order dated March 28, 2018, having appointed date as April 1, 2016. The said order was filed with the Registrar of Companies on April 27, 2018. The entire business with all the assets, liabilities, reserves and surplus of Transferor Companies were transferred to and vested in the Corporation, on a going concern basis with effect from appointed date of April 1, 2016, while the Scheme has become effective from April 27, 2018. Since the Scheme received all the requisite approvals after the financial statements for the years ending March 31, 2017 were adopted by the shareholders, the impact of amalgamation has been given in the current financial year with effect from the appointed date.

The Amalgamation has been accounted as per “Pooling of Interest” method as prescribed by the Accounting Standard 14 “Accounting for Amalgamations”. Accordingly, the accounting treatment has been given as under:-

The assets and liabilities as at April 1, 2017 of eGPPL, eHPPL, ePPPL, eWPPL and eWtPPL were incorporated in the financial statement of the Corporation at its book value.


As per the Accounting Standard on ‘Related Party Disclosures' (AS 18), the related parties of the Corporation are as follows:

A) Subsidiary Companies

HDFC Holdings Ltd. HDFC ERGO General Insurance Company Ltd.

HDFC Trustee Company Ltd. (Formerly HDFC General Insurance Limited from September

HDFC Standard Life Insurance Company Ltd. 14, 2016 and L&T General Insurance Company Limited upto

HDFC Venture Capital Ltd. September 13, 2016)

HDFC Ventures Trustee Company Ltd. HDFC Sales Pvt. Ltd.

GRUH Finance Ltd. HDFC Property Ventures Ltd.

Griha Investments (Subsidiary of HDFC Holdings Ltd.) HDFC Credila Financial Services Private Ltd.

HDFC Education and Development Services Pvt. Ltd. Griha Pte. Ltd. (Subsidiary of HDFC Investments Ltd.)

HDFC Investments Ltd. HDFC Pension Management Company Ltd.

HDFC Asset Management Company Ltd. (subsidiary of HDFC Standard Life Insurance Company Ltd.)

HDFC Capital Advisors Ltd. HDFC International Life and Re Company Limited

HDFC Realty Ltd. (till 24th January, 2018) (subsidiary of HDFC Standard Life Insurance Company Ltd.) HDFC Developers Ltd. (till 24th January, 2018)

B) Associate Companies C) Entities over which control is exercised

HDFC Bank Ltd. HDFC Investment Trust (HIT)

RuralShores Business Services Pvt. Ltd. HDFC Investment Trust - II (HIT- II)

Magnum Foundations Pvt. Ltd. H T Parekh Foundation True North Ventures Private Limited

D) Key Management Personnel E) Relatives of Key Management Personnel

Mr. Keki M. Mistry (Where there are transactions)

Ms. Renu Sud Karnad Mr. Nikhil Singhal

Mr. V. Srinivasa Rangan Ms. Swarn Sud

Mr. Rishi Sud

38. The Corporation has a process whereby periodically all long term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Corporation has reviewed and ensured that adequate provision as required under any law / accounting standards for material foreseeable losses on such long term contracts (including derivative contracts) has been made in the books of accounts.


39.1 Minimum Disclosures

The following additional disclosures have been made as required under the “Housing Finance Companies Corporate Governance (NHB) Directions 2016”.

39.2 Summary of Significant Accounting Policies

The accounting policies regarding key areas of operations are disclosed as note 1 to the accounts. Exchange Traded Interest Rate (IR) Derivatives

The Corporation has not entered into any exchange traded derivatives. Disclosures on Risk Exposure in Derivatives A. Qualitative Disclosure Financial Risk Management

The Corporation has to manage various risks associated with the lending business. These risks include liquidity risk, exchange risk, interest rate risk and counter party risk.

The Financial Risk Management and Hedging Policy as approved by the Board sets limits for exposures on currency and other parameters. The Corporation manages its interest rate and currency risk in accordance with the guidelines prescribed therein.

Liquidity risk and interest rate risks arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of maturity profiles. The currency risk on the borrowings is actively managed mainly through a combination of principal only swaps, forward contracts, and dollar denominated assets. Counter party risk is reviewed periodically to ensure that exposure to various counter parties is well diversified and is within the limits fixed by the Derivative Committee.

As a part of Asset Liability Management, the Corporation has entered into interest rate swaps wherein it has converted its fixed rate rupee liabilities into floating rate linked to various benchmarks.

Constituents of Derivative Business

Financial Risk Management of the Corporation constitutes the Audit Committee, Asset Liability Committee (ALCO), Derivative Committee, Risk management and hedging team.

The Corporation periodically monitors various counter party risk and market risk limits, within the risk architecture and processes of the Corporation.

Hedging Policy

The Corporation has a Financial Risk Management policy and Hedging policy approved by the Board of Directors. For derivative contracts designated as hedges, the Corporation documents at inception, the relationship between the hedging instrument and hedged item. Hedge effectiveness is ascertained periodically on a forward looking basis and is reviewed by the Derivative Committee at each reporting period. Hedge effectiveness is measured by the degree to which changes in the fair value or cash flows of the hedged item that are attributed to the hedged risk are offset by changes in the fair value or cash flows of the hedging instrument.

Measurement and Accounting

The Guidance Note on Accounting for Derivative Contracts issued by the Institute of Chartered Accountants of India is effective from April 1, 2016.

On and from that date, all derivative contracts are recognized on the balance sheet and measured at fair value. The fair value changes are recognized in the Statement of Profit and Loss unless hedge accounting is used. Where hedge accounting is used, fair value changes of the derivative contracts are recognized through the Statement of Profit and Loss in the same period as the offsetting losses and gains on the hedged item. The tenor of hedging instrument may be less than or equal to the tenor of underlying hedged asset or liability.

The Corporation has entered into fair value hedges through interest rate swaps on fixed rate rupee liabilities as a part of the Asset Liability management whereby a portion of the fixed rate liabilities are converted to floating rate. The Corporation has a mark to market gain of ' 1,195 crore on outstanding Fair value hedges.

The long term monetary items other than derivatives continue to be amortized, through the Statement of Profit and Loss over the balance period of such long term asset or liability. Pursuant to the notification dated December 29, 2011 issued by the Ministry of Corporate Affairs amending the Accounting Standard 11, the Corporation has exercised the option as per Para 46A inserted in the Standard for all long term monetary assets and liabilities.

Foreign exchange forward contracts outstanding at the Balance Sheet date, are effectively valued at the closing spot rate. The premium or discount arising at the inception of such forward exchange contract is amortized as expense or income over the life of the contract.

The Corporation has entered into cash flow hedges to hedge the floating rate benchmark on certain foreign currency loans and forward contracts to cover future interest on foreign currency borrowings. Under the cash flow hedge, the hedging instrument is measured at fair value and any gain or loss that is determined to be an effective hedge is recognized in equity i.e., Cash flow Hedge reserve. In order to match the gains and losses of the hedged item and the hedging instrument in the Statement of Profit and Loss, the changes in fair value of the hedging instrument and the hedged item is recognized at the same time in the Statement of Profit and Loss. The outstanding notional of forward contracts to cover future interest on foreign currency borrowings is USD 34.77mn.

39.4.6 Management

Refer to the Management Discussion and Analysis report for the relevant disclosures.

39.4.7 Net Profit or Loss for the period, prior period items and changes in accounting policies

There are no prior period items that have impact on the current year's profit and loss.

39.4.8 Revenue Recognition

There have been no instances in which revenue recognition has been postponed pending the resolution of significant uncertainties.

39.4.9 Accounting Standard 21 - Consolidated Financial Statements (CFS)

Refer to the Consolidated Financial Statements for the relevant disclosures.

39.5.2 Draw Down from Reserves

During FY 2017-18, there were no draw down from Reserves.

39.5.3 Concentration of Public Deposits, Advances, Exposures and NPAs

40. Previous year's figures have been regrouped/reclassified wherever necessary to correspond with the current year's classification/disclosure.

Personnel) Rules, 2014 and any other rules framed there under read with Schedule V to the Companies Act, 2013, including any amendment, modification, variation or re-enactment thereof and the Articles of Association of the Corporation, approval of the Members of the Corporation be and is hereby accorded to the re-appointment of Mr. Keki M. Mistry (DIN: 00008886) as the Managing Director (designated as “Vice Chairman & Chief Executive Officer") of the Corporation for a period of three years, with effect from November 14, 2018, who shall be liable to retire by rotation, upon the terms and conditions including those relating to remuneration more

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