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Housing Development Finance Corporation Ltd.

BSE: 500010 Sector: Financials
NSE: HDFC ISIN Code: INE001A01036
BSE 00:00 | 13 Nov 1824.05 29.00
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NSE 00:00 | 13 Nov 1824.70 28.80
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OPEN 1802.40
PREVIOUS CLOSE 1795.05
VOLUME 34170
52-Week high 2051.00
52-Week low 1642.00
P/E 31.27
Mkt Cap.(Rs cr) 313,271
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1802.40
CLOSE 1795.05
VOLUME 34170
52-Week high 2051.00
52-Week low 1642.00
P/E 31.27
Mkt Cap.(Rs cr) 313,271
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company 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 DEVELOPMENTFINANCE CORPORATION LIMITED (the 'Corporation') which comprise the Balance Sheet as atMarch 31 2018 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

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 state ofaffairs profit/loss and cash flows of the Corporation in accordance with the accountingprinciples generally accepted in India including the Accounting Standards specified undersection 133 of the Act read with relevant rules issued thereunder and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the Corporation and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone financial statements management is responsible forassessing the Corporation's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Corporation or to ceaseoperations or has no realistic alternative but to do so.

Auditor's responsibility

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

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

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

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected

depend on the auditor's judgment including the assessment of the risks of materialmisstatement of the standalone financial statements whether due to fraud or error. Inmaking those risk assessments the auditor considers internal financial control relevantto the Corporation's preparation of the standalone financial statements that give a trueand fair view in order to design audit procedures that are appropriate in thecircumstances.

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

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

We believe that the audit evidence we have obtained including the financial informationas certified by the management of the Corporation as regards erstwhile Grandeur PropertiesPrivate Limited ('GPPL') Haddock Properties Private Limited (‘HPPL') PentagramProperties Private Limited ('PPPL') Winchester Properties Private Limited ('WinchesterLimited') and Windermere Properties Private Limited ('Windermere Limited') (hereinafterall these 5 entities together referred to as 'Transferor Companies') and the auditevidence obtained by the other auditors of the aforesaid Transferor Companies in terms oftheir report referred in the sub-paragraph

(a) of the Other matters below is sufficient and appropriate to provide a basis for ouraudit opinion on 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 management certified financialinformation in respect of the Transferor Companies for the period from April 1 2017 toMarch 28 2018 and the reports of the other auditors on the financial information of theTransferor 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 theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Corporation as at March 31 2018 and its profits and its cash flows forthe year ended on that date.

Other matters

(a) The standalone financial statements of the Corporation include the financialinformation of GPPL HPPL PPPL Winchester Limited and Windermere Limited consequent toits merger into the Corporation which has been effected on March 28 2018 with theappointed date of April 1 2016 (Refer Note 34 to the financial statements). We did notaudit the financial information of the aforesaid Transferor Companies included in thestandalone financial statements of the Corporation whose financial information reflecttotal assets of Rs. 99 crores as at March 28 2018 total revenue of Rs. 59 crores for theyear ended on March 31 2017 and for the period from April 1 2017 to March 28 2018 andnet cash outflows of Rs. 5 crores for the period from April 1 2016 to March 28 2018 asconsidered in the standalone financial statements. We have been provided with thefinancial information of the Transferor Companies for the financial year ended March 312017 which has been audited by other auditors whose reports have been furnished to us andfor the period from April 1 2017 to March 28 2018 by the management of the Corporationand our opinion on the standalone financial statements in so far as it relates to theamounts included in respect of these entities are based solely on the reports of the otherauditors for the year ended March 31 2017 and the financial information for the periodfrom 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 theabove matter with respect to our reliance on the work done and the reports of the otherauditors 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 endedMarch 31 2017 as reported in these standalone financial statements were audited byanother auditor who expressed an unmodified opinion on those standalone financialstatements 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 theCentral Government of India in terms of sub section (11) of Section 143 of the Act wegive in the "Annexure A" a statement on the matters specified in paragraph 3and 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 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;

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

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with relevant rulesissued thereunder and other accounting principles generally accepted in India;

e) On the basis of the written representations received from the Directors of theCorporation as on March 31 2018 taken on record by the Board of Directors of theCorporation and declarations from the Directors of the TransferorCompanies as provided tous by the management of the Corporation none of the Directors are disqualified as onMarch 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 financialreporting of the Corporation and the operating effectiveness of such controls refer toour separate report in "Annexure B"; and

g) 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 standalonefinancial position in its standalone financial statements - Refer Note 23 to thestandalone financial statements;

ii. The Corporation has made provision as required under the applicable law oraccounting standards for material foreseeable losses on long term contracts includingderivative contracts as at year end - Refer Note 38 to the standalone financialstatements;

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

iv. The disclosures in the standalone financial statements regarding holdings as wellas dealings in specified bank notes during the period from November 8 2016 to December30 2016 have not been made since they do not pertain to the financial year ended March31 2018.

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

(Referred to in our report of even date)

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

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

(c) According to the information and explanations given to us and based on test checkexamination of the records and registered sale deed / transfer deed / conveyance deedprovided to us the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Corporation as at the balancesheet date except the following shown as properties under the head of non-currentinvestment:

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 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 is engaged in providingfinancial services primarily into housingfinance. Accordingly it does not hold any physical inventories. Thus paragraph 3 (ii) ofthe Order is not applicable.

(iii) According to the information and explanations given to us and based on the auditprocedures conducted by us the Corporation has granted loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained 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 primafacie not prejudice 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;

(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 theCorporation has complied with the provisions of Section 185 and subsection (1) of 186 ofthe Act in connection with loan to any of its Directors or to any person in whom theDirector is interested and investments made. The Corporation being a housing financecompany nothing contained in Section 186 is applicable except subsection (1) of thatsection.

(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. Accordingly reporting under Clause 3(v)of the Order is not applicable.

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

(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the books of account amounts deducted/ accrued in the books of accountin respect of undisputed statutory dues including provident fund employees' stateinsurance income tax sales tax service tax value added tax goods and services taxcess and other material statutory dues applicable to it have generally been regularlydeposited by the Corporation with the appropriate authorities. As explained to us theCorporation 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 ourexamination of the records no undisputed amounts payable in respect of provident fundemployees' state insurance income tax sales tax service tax value added tax goods andservices tax cess and other material statutory dues were in arrears as at March 31 2018for 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 ourexamination of the records there are no dues of service tax value added tax and goodsand services tax that have not been deposited on account of any dispute. Howeveraccording to the information and explanations given to us the following dues of wealthtax interest on lease tax and Employees' State Insurance and income tax have not beendeposited 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 towa rds 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 ofour examination of the records the Corporation has not defaulted in the repayment ofloans or borrowings to financial institutions banks or debenture holders. The Corporationhas not taken loans or borrowings from government.

(ix) According to the information and explanations given to us and based on ourexamination of the records of the Corporation the Corporation has applied the moneyraised from term loans duringthe year for the purposes for which they were raised otherthan temporary deployment pending application of proceeds. The Corporation has not raisedmoney by way of public offer during the year.

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

(xi) According to the information and explanations given to us and based on ourexamination of the records of the Corporation the Corporation has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

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

(xiii) Accordingto the information and explanations given to us and based on ourexamination of the records of the Corporation transactions with the related parties arein compliance with Section 177 and 188 of the Act where applicable and the details havebeen disclosed in the standalone financial statements as required by the applicableaccounting standards.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Corporation the Corporation has made preferentialallotment and private placement of shares during the year. The Corporation has compliedwith the requirement of Section 42 of the Act and amount raised have been used for thepurposes for which the funds were raised other than temporary deployment pendingapplication of proceeds.

(xv) According to the information and explanations given to us and based on ourexamination of the records of the Corporation the Corporation has not entered into anynon-cash transactions with Directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi) According to the information and explanation given to us the Corporation is notrequired 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.

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

Annexure "B" to the Independent Auditors' Report

(Referred to in our report of even date)

Report on the Internal Financial Controls under Clause (i) of Subsection 3 of Section143 of the Companies Act 2013 (the "Act")

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

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 (the "ICAI"). These responsibilities include the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the orderly and efficient conduct of its business including adherence to theCorporation'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 issued by the ICAI and specifiedunder Section 143(10) of the Act to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls 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 reportingand 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 judgment 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 is sufficient and appropriate toprovide a basis for our audit opinion on the Corporation's internal financial controlssystem over financial reporting.

Meaning of internal financial controls over financial reporting

The company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. The company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and Directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorisedacquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent limitations of internal financial controls over financial reportingBecause ofthe inherent limitations of internal financial controls over financial reportingincluding the possibility of collusion or improper management override of controlsmaterial misstatements due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of the internal financial controls over financial reportingtofuture periods are subject to the risk that the internal financial control overfinancial reporting may become inadequate because of changes in conditions or that thedegree 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 the Corporation has in all material respects an adequate internal financialcontrols system over financial reporting and such internal financial controls overfinancial reporting were operating effectivelyas at 31 March 2018 based on the internalcontrol over financial reporting criteria established by the Corporation consideringtheessential 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

Partner

Membership No: 046768

MUMBAI

April 30 2018