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Housing Development Finance Corporation Ltd.

BSE: 500010 Sector: Financials
NSE: HDFC ISIN Code: INE001A01036
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OPEN 1788.85
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VOLUME 96442
52-Week high 1802.25
52-Week low 1185.00
P/E 39.88
Mkt Cap.(Rs cr) 284,202
Buy Price 0.00
Buy Qty 0.00
Sell Price 1782.50
Sell Qty 1.00
OPEN 1788.85
CLOSE 1788.85
VOLUME 96442
52-Week high 1802.25
52-Week low 1185.00
P/E 39.88
Mkt Cap.(Rs cr) 284,202
Buy Price 0.00
Buy Qty 0.00
Sell Price 1782.50
Sell Qty 1.00

Housing Development Finance Corporation Ltd. (HDFC) - Auditors Report

Company auditors report

TO THE MEMBERS OF OUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of HOUSINGDEVELOPMENT FINANCE CORPORATION LIMITED (the "Corporation") which comprisethe Balance Sheet as at March 31 2017 the Statement of Profit and Loss and the Cash FlowStatement for the year then ended and a summary of the significant accounting policiesand other explanatory information in which are incorporated the returns for the year endedon that date audited by the branch auditor of the Corporation's branch at Dubai.

Management's Responsibility for the Standalone Financial Statements

The Corporation's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the "Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Corporation in accordance with theaccounting principles generally accepted in India including the Accounting Standardsprescribed under section 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Corporationand for preventing and detecting frauds and other irregularities; selection and pplicationof appropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

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

In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under Section 143(10) of the Act. Those Standards requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the standalone financial statements are free frommaterial misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to theCorporation's preparation of the standalone financial statements that give a true and fairview in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Corporation's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe branch auditor is sufficient and appropriate to provide a basis for our audit opinionon the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us and based on the consideration of the report of the branch auditor on thefinancial statements of the branch the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair viewin conformity with the accounting principles generally accepted in India of the state ofaffairs of the Corporation as at March 31 2017 and its profit and its cash flows for theyear ended on that date.

Emphasis of Matter

We refer to Note 3.2 to the standalone financial statements which describes theaccounting treatment used by the Corporation in creating the Deferred Tax Liability onSpecial Reserve under section 36( 1)(viii) of the Income Tax Act 1961 as at April 12014 which is in accordance with the National Housing Bank's Circular No. NHB(ND)/DRS/Pol. Circular No. 65/2014 dated August 22 2014.

Our opinion is not modified in respect of this matter.

Other Matter

We did not audit the financial statements of Dubai branch included in the standalonefinancial statements of the Corporation whose financial statements reflect total assets ofRs. 0.27 crore as at March 31 2017 and total revenues of Rs. 0.50 crore for the yearended on that date as considered in the standalone financial statements. The financialstatements of this branch has been audited by the branch auditor whose report has beenfurnished to us and our opinion in so far as it relates to the amounts and disclosuresincluded in respect of that branch and our report in terms of subsection (3) of Section143 of the Act in so far as it relates to the aforesaid branch is based solely on thereport of such branch auditor.

Our opinion on the standalone financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

1. As required by Section 143 (3) of the Act based on our audit and on theconsideration of the report of the branch auditor referred to in the Other Matterparagraph above we report to the extent applicable that:

a) We have sought and obtained all the information and explanations which to the bestof 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 theCorporation so far as it appears from our examination of those books and proper returnsadequate for the purposes of our audit have been received from Dubai branch not visited byus.

c) The reports on the accounts of Dubai branch of the Corporation audited under Section143 (8) of the Act by the branch auditor has been sent to us and has been properly dealtwith by us in preparing this report.

d) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the relevant books of account and with thereturns received from Dubai branch not visited by us.

e) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under section 133 of the Act.

f) On the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on March 312017 from being appointed as a director in terms of Section 164 (2) of the Act.

g) With respect to the adequacy of the internal financial controls over financialreporting of the Corporation and its branch refer to our separate Report in "AnnexureA". Our report expresses an unmodified opinion on the adequacy and operatingeffectiveness of the Corporation's internal financial controls over financial reporting.

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

i. The Corporation has disclosed the impact of pending litigations on its financialposition in its standalone financial statements;

ii. The Corporation has made provision as required under the applicable law oraccounting standards for material foreseeable losses on longterm contracts includingderivative contracts as at year end.

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

iv. The Corporation has provided requisite disclosures in the standalone financialstatements as regards its holding and dealings in

Specified Bank Notes as defined in the Notification S.O. 3407(E) dated November 8 2016of the Ministry of Finance during the period from November 8 2016 to December 30 2016.Based on audit procedures performed and the representations provided to us by theManagement we report that the disclosures are in accordance with the books of accountmaintained by the Corporation and as produced to us by the Management.

2. As required by the Companies (Auditor's Report) Order 2016 (the "Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm's Registration No. 117366W/W-100018)

P. R. Ramesh
MUMBAI Partner
May 4 2017 (Membership No. 70928)

Annexure "A" to the Independent Auditors' Report

(Referred to in paragraph 1(g) under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Act

We have audited the internal financial controls over financial reporting of HOUSINGDEVELOPMENT FINANCE CORPORATION LIMITED (the "Corporation") as of March 312017 in conjunction with our audit of the standalone financial statements of theCorporation for the year ended on that date which includes internal financial controlsover financial reporting of the Corporation's branch.

Management's Responsibility for Internal Financial Controls

The Corporation's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Corporation considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting (the "Guidance Note") issued by the Institute of Chartered Accountantsof India. These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to respectiveCorporation's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditor's Responsibility

Our responsibility is to express an opinion on the Corporation's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing prescribed under Section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained and the audit evidence obtained bythe branch auditor in terms of their report referred to in the Other Matter paragraphbelow is sufficient and appropriate to provide a basis for our audit opinion on theCorporation's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

The Corporation's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. The Corporation's internal financial controlover financial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Corporation; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures of the Corporation are being made only in accordance with authorisationsof management and directors of the Corporation; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorised acquisition use or dispositionof the Corporation'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 financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe 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 givento us and based on the consideration of the report of the branch auditor on internalfinancial controls system over financial reporting of the branch referred to in the OtherMatter paragraph below the Corporation has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2017 basedon the internal control over financial reporting criteria established by the Corporationconsidering the essential components of internal control stated in the Guidance Note.

Other Matter

Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operatingeffectiveness of the internal financial controls over financial reporting insofar as itrelates to a branch is based on the corresponding report of the branch auditor.

Our opinion is not modified in respect of this matter.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm's Registration No. 117366W/W-100018)

P. R. Ramesh
MUMBAI Partner
May 4 2017 (Membership No. 70928)

Annexure "B" to the Independent Auditors' Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) (a) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has maintained proper records showing full particularsincluding quantitative details and situation of fixed assets.

(b) The fixed assets were physically verified during the year by the Management inaccordance with a regular programme of verification which in our opinion provides forphysical verification of all the fixed assets at reasonable intervals. According to theinformation and explanation given to us no material discrepancies were noticed on suchverification.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed /conveyance deed provided to us we report that the title deeds comprising all theimmovable properties of land and buildings which are freehold are held in the name of theCorporation as at the balance sheet date except the following:

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

(ii) The Corporation does not have any inventory and hence reporting under Clause 3(ii)of the Order is not applicable.

(iii) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has granted loans secured or unsecured to companies orother parties covered in the register maintained under section 189 of the Act in respectof which:

(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Corporation's interest.

(b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts and interest have been regular as perstipulations.

Particulars of the land and building Rs. crore Remarks
Freehold land and building of Global Perspectives Limited located at Gurgaon admeasuring 2.07 acres 72.10 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 42.00

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

(iv) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has not granted any loans made investments or provideguarantees under the provisions of Sections 185 and 186 of the Act and hence reportingunder Clause 3(iv) of the Order is not applicable.

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

(vi) To the best of our knowledge and according to the information and explanationsgiven to us the Central Government has not prescribed the maintenance of cost recordsunder section 148(1) of the Act in respect of the services rendered by the Corporation.

(vii) To the best of our knowledge and according to the information and explanationsgiven to us in respect of statutory dues:

(a) The Corporation has generally been regular in depositing undisputed statutory duesincluding Income Tax Sales Tax Work Contract Tax Value Added Tax Service Tax CessProvident Fund Employees' State Insurance and other material statutory dues applicable toit to the appropriate authorities. There were no amounts payable in respect of CustomsDuty and Excise Duty.

(b) There were no undisputed amounts payable in respect of Income Tax Sales Tax WorkContract Tax Value Added Tax Service Tax Cess Provident Fund Employees' StateInsurance and other material statutory dues in arrears as at March 31 2017 for a periodof more than six months from the date they became payable.

(c) Details of dues of Wealth tax Interest on Lease Tax and Employees' State Insurancewhich have not been deposited as on March 31 2017 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Involved Rs. crore Amount Unpaid Rs. crore
The Wealth Tax Act 1957 Wealth Tax Assistant Commissioner of Wealth Tax 1998-99 0.12 0.12
Maharashtra Sales Tax on the Transfer of the Right to use any Goods for any Purpose Act 1985 Interest on Lease Tax Commissioner of Sales Tax (Appeals) 1999-2000 0.02 0.02
Employees State Insurance Act 1948 Payment towards Employer's Contribution to ESIC Assistant/Deputy Director - ESIC 2010-2011 0.01 0.01

(viii) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has not defaulted in the repayment of loans or borrowings tofinancial institutions banks and dues to debenture holders. The Corporation has not takenloans or borrowings from government.

(ix) To the best of our knowledge and according to the information and explanationsgiven to us the money raised by way of the public offer of rupee denominated global bondsand term loans have been applied by the

Corporation during the year for the purposes for which they were raised other thantemporary deployment pending application of proceeds.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Corporation and no material fraud on the Corporation by itsofficers or employees has been noticed or reported during the year.

(xi) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has paid / provided managerial remuneration in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

(xii) The Corporation is not a Nidhi Company and hence reporting under Clause 3(xii) ofthe Order is not applicable.

(xiii) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation is in compliance with Sections 188 and 177 of the Act whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.

(xiv) To the best of our knowledge and according to the information and explanationsgiven to us the Corporation has not made any preferential allotment or private placementof shares or fully or partly convertible debentures and hence reporting under Clause3(xiv) of the Order is not applicable to the Corporation.

(xv) To the best of our knowledge and according to the information and explanationsgiven to us during the year the Corporation has not entered into any non-cashtransactions with its directors or persons connected with him and hence provisions ofsection 192 of the Act are not applicable.

(xvi) The Corporation is not required to be registered under section 45-IA of theReserve Bank of India Act 1934.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants (Firm's Registration No. 117366W/W-100018)

P. R. Ramesh
MUMBAI Partner
May 4 2017 (Membership No. 70928)