Housing Development Finance Corporation Ltd.

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You can view full text of the latest Auditor Report for the company.

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 

Independent Auditors’ Report

TO THE MEMBERS OF

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Report on the standalone financial statements

We have audited the accompanying standalone financial statements of HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (the 'Corporation'), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

Management’s responsibility for the standalone financial statements

The Corporation's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the 'Act') with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit/loss and cash flows of the Corporation in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act, read with relevant rules issued there under and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Corporation and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the standalone financial statements, management is responsible for assessing the Corporation's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Corporation or to cease operations, or has no realistic alternative but to do so.

Auditor’s responsibility

Our responsibility is to express an opinion on these standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143 (10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Corporation's preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Corporation's Directors, as well as evaluating the overall presentation of the standalone financial statements.

We are also responsible to conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Corporation's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor's report. However, future events or conditions may cause the Corporation to cease to continue as a going concern.

We believe that the audit evidence we have obtained including the financial information as certified by the management of the Corporation as regards erstwhile Grandeur Properties Private Limited ('GPPL'), Haddock Properties Private Limited ('HPPL'), Pentagram Properties Private Limited ('PPPL'), Winchester Properties Private Limited ('Winchester Limited') and Windermere Properties Private Limited ('Windermere Limited') (hereinafter all these 5 entities together referred to as 'Transferor Companies') and the audit evidence obtained by the other auditors of the aforesaid Transferor Companies in terms of their report referred in the sub-paragraph

(a) of the Other matters below is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of the management certified financial information in respect of the Transferor Companies for the period from April 1, 2017 to March 28, 2018 and the reports of the other auditors on the financial information of the Transferor Companies for the year ended March 31, 2017, referred in the sub-paragraph (a) of the Other matters below, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Corporation as at March 31, 2018, and its profits and its cash flows for the year ended on that date.

Other matters

(a) The standalone financial statements of the Corporation include the financial information of GPPL, HPPL, PPPL, Winchester Limited and Windermere Limited consequent to its merger into the Corporation which has been effected on March 28, 2018, with the appointed date of April 1, 2016 (Refer Note 34 to the financial statements). We did not audit the financial information of the aforesaid Transferor Companies, included in the standalone financial statements of the Corporation, whose financial information reflect total assets of Rs, 99 crores as at March 28, 2018, total revenue of Rs, 59 crores for the year ended on March 31, 2017 and for the period from April 1, 2017 to March 28, 2018 and net cash outflows of Rs, 5 crores for the period from April 1, 2016 to March 28, 2018 as considered in the standalone financial statements. We have been provided with the financial information of the Transferor Companies for the financial year ended March 31, 2017 which has been audited by other auditors whose reports have been furnished to us and for the period from April 1, 2017 to March 28, 2018 by the management of the Corporation and our opinion on the standalone financial statements in so far as it relates to the amounts included in respect of these entities are based solely on the reports of the other auditors for the year ended March 31, 2017 and the financial information for the period from April 1, 2017 to March 28, 2018 as certified by the management of the Corporation.

Our opinion on the standalone financial statements is not modified in respect of the above matter with respect to our reliance on the work done and the reports of the other auditors and the financial information as certified by the management of the Corporation.

(b) Attention is drawn to the fact that the corresponding figures for the year ended March 31, 2017 as reported in these standalone financial statements were audited by another auditor who expressed an unmodified opinion on those standalone financial statements, dated 4 May 2017.

Report on other legal and regulatory requirements

As required by the Companies (Auditor's Report) Order, 2016 (the 'Order') issued by the Central Government of India in terms of sub section (11) of Section 143 of the Act, we give in the “Annexure A”, a statement on the matters specified in paragraph 3 and 4 of the Order, to the extent applicable.

As required by Section 143 (3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Corporation so far as it appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with relevant rules issued there under and other accounting principles generally accepted in India;

e) On the basis of the written representations received from the Directors of the Corporation as on March 31, 2018 taken on record by the Board of Directors of the Corporation and declarations from the Directors of the Transferor

Companies as provided to us by the management of the Corporation, none of the Directors are disqualified as on March 31, 2018 from being appointed as a Director in terms of Section 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financial reporting of the Corporation and the operating effectiveness of such controls, refer to our separate report in “Annexure B”; and

g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:

i. The Corporation has disclosed the impact of pending litigations on its standalone financial position in its standalone financial statements -Refer Note 23 to the standalone financial statements;

ii. The Corporation has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long term contracts including derivative contracts as at year end - Refer Note 38 to the standalone financial statements;

iii. There has been no delay in transferring amounts, required to be transferred to the Investor Education and Protection Fund by the Corporation; and

iv. The disclosures in the standalone financial statements regarding holdings as well as dealings in specified bank notes during the period from November 8, 2016 to December 30, 2016 have not been made since they do not pertain to the financial year ended March 31, 2018.

(Referred to in our report of even date)

(i) (a) The Corporation has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b) The Corporation has a regular programme of physical verification of fixed assets by which fixed assets are verified annually. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Corporation and the nature of its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and based on test check examination of the records and registered sale deed / transfer deed / conveyance deed provided to us, the title deeds, comprising all the immovable properties of land and buildings which are freehold, are held in the name of the Corporation as at the balance sheet date, except the following shown as properties under the head of non-current investment:

Particulars of land and Building

Rs, in crore

Remarks

Freehold land and building of Global Perspectives Limited located at Gurgaon, admeasuring 2.07 acres

72

The Corporation is in the process of transferring these asset in its name. The process will be concluded after the necessary regulatory clearances have been obtained.

Freehold land and building of Colossal Properties Private Limited located at New Delhi, admeasuring 2.52 acres

42

In respect of immovable properties of land and buildings that have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the Corporation, where the Corporation is the lessee in the agreement.

(ii) The Corporation is engaged in providing financial services primarily into housing finance. Accordingly, it does not hold any physical inventories. Thus, paragraph 3 (ii) of the Order is not applicable.

(iii) According to the information and explanations given to us and based on the audit procedures conducted by us, the Corporation has granted loans, secured or unsecured to companies, firms, limited liability partnerships or other parties covered in the register maintained under Section 189 of the Act, in respect of which:

(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudice to the Corporation's interest;

(b) The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations;

(c) There is no overdue amount remaining outstanding as at the year end.

(iv) In our opinion and according to the information and explanations given to us, the Corporation has complied with the provisions of Section 185 and subsection (1) of 186 of the Act in connection with loan to any of its Directors or to any person in whom the Director is interested and investments made. The Corporation being a housing finance company, nothing contained in Section 186 is applicable, except subsection (1) of that section.

(v) As per the Ministry of Corporate Affairs notification dated March 31, 2014, the provisions of Sections 73 to 76 or any other relevant provisions of the Act and the Companies (Acceptance of Deposits) Rules, 2014, as amended, with regard to the deposits accepted are not applicable to the Corporation. Accordingly, reporting under Clause 3(v) of the Order is not applicable.

(vi) The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act, for any services rendered by the Corporation. Accordingly paragraph 3(vi) of the Order is not applicable.

(vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of account, amounts deducted/ accrued in the books of account in respect of undisputed statutory dues including provident fund, employees' state insurance, income tax, sales tax, service tax, value added tax, goods and services tax, cess and other material statutory dues applicable to it have generally been regularly deposited by the Corporation with the appropriate authorities. As explained to us, the Corporation did not have any dues on account of Customs Duty and Excise Duty.

According to the information and explanations given to us and on the basis of our examination of the records, no undisputed amounts payable in respect of provident fund, employees' state insurance, income tax, sales tax, service tax, value added tax, goods and services tax, cess and other material statutory dues were in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of our examination of the records, there are no dues of service tax, value added tax and goods and services tax that have not been deposited on account of any dispute. However, according to the information and explanations given to us, the following dues of wealth tax, interest on lease tax and Employees' State Insurance and income tax, have not been deposited by the Corporation on account of disputes.

Name of the statute

Nature of dues

Amount (Rs, in crore)

Period to which the amount relates

Forum where dispute is pending

The Wealth Tax Act, 1957

Wealth Tax

0.12

1998-99

Assistant Commissioner of Wealth Tax

Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act, 1985

Interest on lease tax

0.02

1999-2000

Commissioner of Sales Tax (Appeals)

Employees State Insurance Act, 1948

Payment towards Employer's Contribution to ESIC

0.01

2010-2011

Assistant/ Deputy Director- ESIC

The Income Tax Act, 1961

Penalty

Levied

0.02

2012-13

Commissioner of Income Tax (Appeal) (Mumbai)

(viii) According to the information and explanations given to us and on the basis of our examination of the records, the Corporation has not defaulted in the repayment of loans or borrowings to financial institutions, banks or debenture holders. The Corporation has not taken loans or borrowings from government.

(ix) According to the information and explanations given to us and based on our examination of the records of the Corporation, the Corporation has applied the money raised from term loans during the year for the purposes for which they were raised other than temporary deployment pending application of proceeds. The Corporation has not raised money by way of public offer during the year.

(x) According to the information and explanations given to us, no material fraud by the Corporation or on the Corporation by its officers or employees has been noticed or reported during the year.

(xi) According to the information and explanations given to us and based on our examination of the records of the Corporation, the Corporation has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us, the Corporation is not a Nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii) According to the information and explanations given to us and based on our examination of the records of the Corporation, transactions with the related parties are in compliance with Section 177 and 188 of the Act where applicable and the details have been disclosed in the standalone financial statements, as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Corporation, the Corporation has made preferential allotment and private placement of shares during the year. The Corporation has complied with the requirement of Section 42 of the Act and amount raised have been used for the purposes for which the funds were raised other than temporary deployment pending application of proceeds.

(xv) According to the information and explanations given to us and based on our examination of the records of the Corporation, the Corporation has not entered into any non-cash transactions with Directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi) According to the information and explanation given to us, the Corporation is not required to be registered under Section 45-IA of the Reserve Bank of India Act, 1934. Thus, paragraph 3 (xvi) of the Order is not applicable to the Corporation.

(Referred to in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section 143 of the Companies Act, 2013 (the “Act”)

We have audited the internal financial controls over financial reporting of Housing Development Finance Corporation Limited (the “Corporation”) as of 31 March 2018 in conjunction with our audit of the standalone financial statements of the Corporation for the year ended on that date.

Management’s responsibility for internal financial controls

The Corporation's management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Corporation considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India (the “ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the Corporation's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s responsibility

Our responsibility is to express an opinion on the Corporation's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing, issued by the ICAI and specified under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Corporation's internal financial controls system over financial reporting.

Meaning of internal financial controls over financial reporting

The company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and Directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls over financial reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion, to the best of our information and according to the explanations given to us, the Corporation has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Corporation considering the essential components of internal control stated in the Guidance Note issued by the ICAI.

For B S R & Co. LLP

Chartered Accountants

Firm's Registration No: 101248W/W-100022

AKEEL MASTER

MUMBAI Partner

April 30, 2018 Membership No: 046768


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