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Housing & Urban Development Corporation Ltd.

BSE: 540530 Sector: Financials
NSE: HUDCO ISIN Code: INE031A01017
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VOLUME 415298
52-Week high 58.25
52-Week low 30.60
P/E 4.50
Mkt Cap.(Rs cr) 6,726
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 32.65
CLOSE 32.70
VOLUME 415298
52-Week high 58.25
52-Week low 30.60
P/E 4.50
Mkt Cap.(Rs cr) 6,726
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Housing & Urban Development Corporation Ltd. (HUDCO) - Auditors Report

Company auditors report

TO THE MEMBERS OF HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

1. We have audited the Standalone Financial Statements of Housing and Urban DevelopmentCorporation Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2021 and the Statement of Profit and Loss (including Other Comprehensive Income)the statement of changes in equity and the Statement of Cash Flows for the year thenended and notes to the Standalone financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the Standalone Financial Statements").

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2021 and its profitincluding chang other comprehensive income es in equity and its cash flows for the yearended on that date.

Basis for Opinion

3. We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India ("ICAI") together with theethical requirements that are relevant to our audit of the standalone financial statementsunder the provisions of the Companies Act 2013 and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinionon the standalone financial statements.

Emphasis of Matter

4. We draw attention to the following matter in the Notes to the Standalone financialstatements:

i) The Company has recognised interest income on "No Lien AGP Account"amounting to Rs 27.59 crore [Rs. 27.20 crore for the previous year ended 31st March 2020]for the year ended 31st March 2021. The same has been shown in Note 28 (Other Income)under head 'Interest on Construction Project'.

The balance outstanding as at the end of the year is Rs. 493.33 crore (debit) in"No Lien AGP Account". The Company is in discussion with MoHUA forrecovery/reimbursement of outstanding amount including interest as well as booking ofexpenses. [Refer Para 3 of Note 40]

Our opinion is not modified in respect of this matter.

ii) We draw your attention to Para 8 of Note 40 to the Standalone financial resultswhich explains the uncertainties and the management's assessment of the financial impactdue to the lock-downs and other restrictions and conditions related to the Covid-19pandemic situation for which a definitive assessment of the impact in the subsequentperiod is highly dependent upon circumstances as they evolve in the subsequent period.

Our opinion is not modified in respect of this matter.

Key Audit Matters

5. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Financial Statements of the current period.These matters were addressed in the context of our audit of the Standalone FinancialStatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our reports:

Sr. No Key Audit Matter Auditor’s Response
1. Ind AS 109 on Financial Instruments establishes a comprehensive framework for determining expected credit losses accuracy of classification recognition de- recognition and measurement requirements for all the financial assets and liabilities. Principal Audit Procedures
Considering the materiality of the amounts involved possible effect from the pandemic Covid-19 the significant management judgment required in estimating the expected credit losses as well as measuring Financial Assets and Financial Liabilities and such estimates and judgments being inherently subjective this matter has been identified as a key audit matter for the current year audit. Our procedures included but were not limited to the following:
(Refer Notes No : 6 7 8 9 10 11 12 16 17 18 19 20 33 36 37 and 40 to standalone financial statements ) Our Audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Obtained an understanding of the systems processes and controls implemented by management for recording and calculating Expected credit losses (ECL) recognition de-recognition and measurement of Financial Assets and Financial Liabilities for classifying financial assets portfolio into stages based on credit risk.
Discussed with appropriate senior management and evaluated management's underlying key assumptions in estimating the expected credit losses and measuring Financial Assets and Financial Liabilities.
Selected the sample and tested the operating effectiveness of the internal control relating to recognition measurement and de- recognition of financial assets and financial liabilities and calculation of ECL. We carried out a combination of procedures involving enquiry and observation performance and inspection of evidence in respect of operation of these controls.
Tested the relevant information technology systems access and change management controls relating to contracts and related information used in recording financial assets/ liabilities and calculation of ECL in accordance with the said Ind AS.
Tested the appropriate staging of assets basis their days past due and other loss indicators on sample basis.

Other Information

6. The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sAnnual Report but does not include the standalone financial statements and our auditor'sreport thereon. The Annual report for the year ending 31st March 2021 is expected to bemade available to us after the date of this auditor's statements does not cover the otherreport. Our opinion information the standalone financial and we do not express anyform of assurance conclusion thereon.

In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained in the audit or otherwise appears to bematerially misstated.

If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements

7. The Company'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 including other Comprehensive income Changes in Equityand Cash flows of the Company in accordance with the accounting principles generallyaccepted in India including the Indian accounting Standards (Ind ASs) specified underSection 133 of the Act This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

8. In preparing the Standalone Financial Statements the Board of Directors isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless Board of Directors either intend to liquidate the Company or tocease operations or has no realistic alternative but to do so.

9. Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements.

10. Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.

11. As Part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the Standalone FinancialStatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of Internal control.

Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(i) of theCompanies Act 2013 we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls with reference to Standalone FinancialStatements in place and the operating effectiveness of such controls.

Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

Conclude on the appropriateness of management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.

Evaluate the overall presentation structure and content of the Standalone FinancialStatements including the disclosures and whether the standalone financial statementsrepresenting the underlying transactions and events in a manner that achieves fairpresentation.

12. We communicate with those charged with governance regarding among other mattersthe planned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.

13. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour Independence and where applicable related safeguards.

14. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the Standalone FinancialStatements of the current period and are therefore the key audit matters. We describethese matters in our Auditor's Report unless law or regulation precludes public disclosureabout the matter or when in extremely rare circumstances we determine that a mattershould not be communicated in our report because the adverse consequences of doing sowould reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

15. 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 ofthe Act we give in the Annexure- "A" a statement on the mattersspecified in Paragraph 3 and 4 of the said Order to the extent applicable.

16. We are enclosing our report in terms of Section 143(5) of the Act on the basis ofsuch checks of the books and records of the Company as we considered appropriate andaccording to the information and explanations given to us in the Annexure 'B' onthe directions issued by the Comptroller and Auditor General of India.

17. 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 thebest of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of accounts as required by law have been kept bythe Company so far as it appears from our examination of those books.

c) The Standalone Balance Sheet the Statement of Profit and loss [including OtherComprehensive income] Statement of Changes in Equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standard ("Ind- As") specified under Section 133 of the Act;

e) The provisions of section 164(2) of the Companies Act 2013 in respect ofdisqualifications of directors are not applicable to the Company being Government Companyin terms of notification no. G.S.R. 463(E) dated 5 th June 2015 issued by the Ministry ofCorporate affairs.

f) With respect of the adequacy of the Internal Financial Controls overfinancialreporting of the Company and the operating effectiveness of such controls referto our separate report inAnnexure 'C'; 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 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on financialposition on its Standalone financial statements; (Refer Para 2(a)of Note no 40 tostandalone financial statements)

ii. The Company does not have any material foreseeable losses on long termscontracts including derivative contracts; (Refer Para 34 of Note no 40 to standalonefinancial statements)

iii. There has been no delay in transferring amounts required to be transferredto the Investor Education and Protections Fund by the Company; (Refer Para 15 of Noteno 40 to standalone financial statements)

NHB/RBI Directions

18. The Company is complying with National Housing Bank's (NHB)/Reserve Bank ofIndia's (RBI) credit concentration norms in respect of loans to private sectoragencies. However in case of loans to State Governments/State GovernmentsAgencies/Central Government Agencies the said norms have been relaxed by the NHB/RBI videvarious letters (Refer Para no.13 of Note No.40); the same is complied with exceptin case of Investment in equity shares of Housing Finance Company Indbank Housing Limited(Investee Company) where investment in 25% of equity capital of investeeCompany has been made instead of prescribed limit of 15%.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Rajan Uppal
Partner
Place of signature : New Delhi (Membership No. : 097379)
Date : 29th June 2021 UDIN: 21097379AAAACQ3928

ANNEXURE "A" TO THE INDEPENDENT AUDITOR’S REPORT

(Annexure referred to in Paragraph "15" under 'Report on Other Legal andRegulatory Requirements' section of our report of even date to the members of Housing andUrban Development Corporation Limited on the Standalone Financial Statements for the yearended March 31st 2021).

(i). In respect of Fixed assets:

a) The Company has maintained proper records showing full particulars includingquantative details and situation of fixed assets.

b) As per information and explanation given to us there is a regular programme ofphysical verification of all fixed assets once every year which in our opinion isreasonable having regard to the size of the Company and the nature of its assets. Pursuantto the program fixed assets were physically verified by the management during the year.In our opinion and as per the information given by the management the discrepanciesobserved were not material and have been appropriately accounted for in the books.

c) The title / lease deeds of the immovable properties are held in the name of theCompany except in case of Leasehold Land/ Flats/ building/ measuring 11521.53 squaremeters having cost of Rs.33.99 crore and Freehold Land/ flats/ building measuring 5718.03square meters having cost of Rs.6.51 crore of which title/ lease deeds are pending forexecution in the name of the Company.

(ii). The nature of business of the Company does not require it to have anyinventory. Hence the requirements of clause (ii) of Paragraph 3 of the said order arenot applicable to the Company.

(iii). According to the information and explanation given to us the Company hasnot granted any loans secured or unsecured to any companies firm limited liabilitypartnerships or other parties covered in the register required to be maintained undersection 189 of the Companies Act 2013 ('the Act'). Hence reporting under clauses 3 (iii)(a) (b) and (c) of the order is not applicable to the Company.

(iv). In our opinion and according to the information and explanation given to usthe Company has not granted any loans or provided any guarantees or security to theparties covered under Section 185 of the Act. The Company has complied with the provisionsof Section 186 of the Act in respect of Investments made or loans or guarantee or securityprovided to the parties covered under Section 186 of the Act.

(v). The Company has not accepted deposits from public during the year underreview. According to the information and explanation given to us the Company haddiscontinued accepting/ renewing Public Deposit under the Public Deposit Scheme w.e.f. 1stJuly 2019. However the Company has complied with directives issued by National HousingBank / Reserve Bank of India; and the provisions of section 73 to 76 and other applicablerelevant provisions of the Companies Act 2013 and the rules framed thereunder with regardto deposits outstanding during the year.

(vi). According to the information and explanations given to us the CentralGovernment has not prescribed the maintenance of cost records under subsection (1) ofSection 148 of the Companies Act 2013 in respect of the business of the Company.

(vii). a) According to the information and explanation given to us and therecords produced before us for verification the Company has generally been regular indepositing with appropriate authorities the undisputed statutory dues including Providentfund Income tax Wealth tax GST and any Other Statutory dues applicable to it;

b) According to the information and explanation given to us no undisputed amountspayable in respect of Income tax Sales tax/ Value Added Tax Service Tax GST and anyother material statutory dues were in arrears as at 31st March 2021 for a period of morethan six months from the date they became payable;

c) According to the information and explanations given to us the Income taxwealth tax and services tax dues which are pending on account of dispute are as under:

Name of the Statue Nature of Dues Amount (in ` crore) Period to which amount relates Forum where the dispute is pending
Income Tax Act 1961 Disputed Income-tax demand 20.30# AY 1996-97 AY 1998-1999 Add. CIT and High Court
Income Tax Act 1961 Disputed Income-tax demand 20.55# AY 2004-05 and AY 2015-16 ITAT and Add. CIT
Income Tax Act 1961 Disputed Income-tax demand 40.65# AY 2010-11 to AY 2012-13 and AY 2014-15 ITAT
Income Tax Act 1961 Disputed Income-tax demand 37.70# AY 2013-14 AY 2016-17 and AY 2017-18 CIT(A)
Income Tax Act 1961 Disputed Income-tax demand 77.53# AY 1998-99 to AY 2004-05 AY 2007- 08 and AY 2008-09 Add. CIT
Income Tax Act 1961 Disputed Income-tax demand 73.90# AY 2005-06 to AY 2009-10 Add. CIT ITAT and Supreme Court
Income Tax Act 1961 Disputed Income-tax demand 13.38# AY 1997-98 CBDT and Add. CIT
Wealth Tax Act 1957 Wealth Tax 0.01@ AY 1995-96 Add. CIT
Service Tax- Finance Act 1994 Disputed Service tax demand 2.32* FY 2007-08 to FY 2017-18 Assistant/ Deputy/ Joint Commissioner of Service Tax/ GST
Service Tax- Finance Act 1994 Disputed Service tax demand 2.49* FY 2004-05 to FY 2007-08 High Court
Service Tax- Finance Act 1994 Disputed Service tax demand 1.91* FY 2005-06 to FY 2008-09 CESTAT
Total 290.74

# Against disputed Income tax demand amounting to Rs. 284.01 crore Rs. 279.79 crorehas been adjusted by authorities or paid by the Company under protest from time to timeand remaining Rs. 4.22 crore has not been paid.

@ Wealth tax demand amounting to Rs. 0.01 crore paid under Protest by the Company.

* In respect of disputed Service Tax demand amounting to Rs. 6.72 crore Rs. 2.63 crorehas been paid by the Company under protest from time to time and remaining Rs. 4.09 crorehas not been paid.

d) According to the information and explanations given to us the amount which wasrequired to be transferred to Investor Education and Protection Fund in accordance withsub section (5) of section 125 of the Companies Act 2013 has been transferred. Theunclaimed amount lying in other financial liabilities includes interest of Rs. 0.02 croreas on March 31st 2021 which have lapsed 7 years from the respective due datesof interest payment and not transferred to IEPF since 7 years from the maturity date ofbonds / deposits / debentures has not been completed yet. (Refer Para 15 of Note 40 tostandalone financial statements).

(viii). In our opinion and as per the information and explanations given to us theCompany has not defaulted in repayment of dues to financial institutions banks andGovernment or debenture holders;

(ix). According to the information and explanation given to us the Company hasraised the money through bonds issue and term loan. The proceeds of such bonds issue andterms loan have been utilized for the purpose for which they were issued.;

(x). According to the information and explanation given to us and as represented bythe management and based on our examination of the books and records of the Company and inaccordance with the Generally Accepted Auditing Practices in India no case of frauds bythe Company or on the Company by its officers or employees has been noticed or reportedduring the

(xi). The provisions of Section 197 of the Companies Act 2013 relating tomanagerial remuneration are not applicable to the Company being a Government Company interms of MCA Notification no. G.S.R. 463 (E) dated 5 th June 2015;

(xii). The Company is not a Nidhi Company and hence the requirement of clause3(xii) of the order is not applicable;

(xiii). In our opinion and according to the information and explanation given tous transactions during the year with related parties were approved by the Audit Committeeand are in compliance with Section 177 of the Companies Act 2013 where applicable andsince the said transactions were in the ordinary course of business of the Company andwere at arm length basis the provisions of Section 188 are not applicable and thedetails have been disclosed in the Standalone Financial Statements as required by theapplicable Indian accounting standards (Ind AS);

(xiv). According to the information and explanation given to us the Company hasnot made any preferential allotment or private placement of shares or fully or partlyconvertible debentures during the year under review;

(xv). In our opinion and according to the information and explanations given to usthe Company has not entered into any non - cash transaction with director or personsconnected with him;

(xvi). The Company being a Housing Finance Company is registered with NationalHousing Bank vide Registration No. 01.0016.01 by which NHB has granted status of HousingFinance Company (HFC) to the Company on 31st July 2001. Further Reserve Bank of India hasissued notification RBI/2020-21/60 DOR.NBFC (HFC).CC.No.118/03.10.136/2020-21 dated 22October 2020 on regulatory framework for HFCs by which the definition of HFCs hasundergone a change. The Company is not meeting principal business criterion as mentionedin the notification for Housing Finance Companies. Accordingly the Company is required toget itself registered as NBFC in terms of the said notification. However on the requestof the Company RBI vide its letter No. DoR.FIN.No.590/03.10.136/2020-21 dated 26 March2021 has granted six months' time to Company to submit board approved plan for conversionto NBFC and obtain fresh registration accordingly.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Rajan Uppal
Partner
Place of signature : New Delhi (Membership No. : 097379)
Date : 29th June 2021 UDIN: 21097379AAAACQ3928

ANNEXURE "B" TO THE INDEPENDENT AUDITORS’ REPORT

(Annexure referred to in paragraph "16" under 'Report on Other Legal andRegulatory Requirements' section of our report of even date to the members of Housing andUrban Development Corporation Limited on the Standalone Financial Statements for the yearended 31st March 2021)

Directions indicating the areas to be examined by the Statutory Auditors during thecourse of audit of annual accounts of Housing and Urban Development Corporation Limitedfor the year 2020-21 issued by the Comptroller and Auditor General of India under section143(5) of the Companies Act 2013.

SR. NO AREAS TO BE EXAMINED REPLY FOR THE AREAS EXAMINED
1. Whether the Company has system in place to process all the accounting transactions through IT system? If yes the implications of processing of accounting transactions outside IT system on the integrity of the accounts along with the financial implications if any may be stated. The Company has the system in place to process all the accounting transactions through IT systems with some exceptions. It has been observed that all the base calculation like finalization of PDS Interest Interest Payable on bonds and Borrowings Depreciation etc. are processed outside IT systems i.e through excel sheets . Once the calculations are finalized then final vouchers are passed through various IT System. During the course of verification on test check basis we have not come across any major calculation mistakes.
As informed to us Company is using Lenova Server Weblogic Linux OS and Developer forms/ Oracle for maintaining the Holfin in which accounting entries/ vouchers are routed through. The Company is also in process of implementation of ERP.
2. Whether there is any restructuring of an existing loan or cases of waiver/write off of debts/ loans/ interest etc. made by a lender to the Company due to the Company's inability to repay the loan? If yes the financial impact may be stated. Whether such cases are properly accounted for. (In case lender is a Government Company then this direction is also applicable for statutory auditor of lender Company) During the Financial Year 2020-21 no cases of restructuring of an existing loan or case of waiver/ write-off of debts/loans/Interest etc. made by a lender to the Company due to the Company's inability to repay the loan has been observed.
However the Company being lender Company has implemented restructuring/resolution plans in respect of 2 project loan accounts amounting to Rs. 526.87 crores during the financialyear under audit. Out of an amount of Rs. 204.86 crore (Principal amount) written off on implementation of plans as aforesaid an amount of Rs. 111.78 crore has been charged to Statement of Profit account and Rs. 93.08 crore has been adjusted from reserve for bad and doubtful debts. However there is corresponding reversal in ECL allowance in this regard.
Further the Company has provided ex-gratia payment of differencebetween compound and simple interest amounting Rs. 0.09 crore for the period 1 March 2020 to 31 August 2020 in view of Govt. of India Ministry of Finance department of Financial Services Letter No. F. No.2/12/2020-BOA.I Dated 23 October 2020 for loans outstanding amount not exceeding Rs. 2 crore in view of extreme Covid-19 situation. As the amount is reimbursed by State bank of India there is no financial impact.
Even further the Company has approved a policy for refund of interest on interest and penal interest for eligible borrowers during the moratorium period from 1 March 2020 to 31 August 2020 in view of RBI Circular No. RBI/2021-22/ 17DOR.STR.REC.4 / 21.01.048/ 2021-22 dated 7 April 2021 in compliance of Hon'ble Supreme Court order. The Company has made a provision of Rs. 17.60 crore for the year ended 31 March 2021 and accordingly interest income by an amount of Rs. 17.60 crore has been reduced.
3. Whether funds (Grants/subsidy etc.) received/ receivable for specific schemes from Central/ State Government or its agencies were properly accounted for/ utilized as per its terms and conditions? List the cases of deviation. On the basis of selective audit procedures we have observed that the Company has not received any grant/ subsidy from Central/ State Govt. agencies for their own utilization. The Company act as channelizing agency for different Govt. of India’s Programmes. The funds received/ receivable for specific schemes from Central/ State agencies in this regard were properly accounted for/ utilized as per its terms and conditions.

 

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Rajan Uppal
Partner
Place of signature : New Delhi (Membership No. : 097379)
Date : 29th June 2021 UDIN: 21097379AAAACQ3928

ANNEXURE "C" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED FORTHE YEAR ENDED 31st MARCH 2021

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

1. We have audited the internal financial controls over financial reporting of HOUSINGAND URBAN DEVELOPMENT CORPORATION LIMITED ("the Company") as of March 31st2021 in conjunction with our audit of the Standalone financial statements of the Companyfor the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor’s Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the 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 judgment including the assessment of the risks ofmaterial misstatement of the Standalone financial statements whether due to fraud orerror.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toCompany's internal financial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company'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. A Company's internal financial control overfinancial reporting includes those policies and procedures that

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of standalone financial statements in accordance with generally acceptedaccounting principles and that receipts and the Company are being made only in accordancewith authorizations of management and directors of the Company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company's assets that could have amaterial effect on the standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

7. 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 inadequate because of changes in conditions or that the degree of compliancewith the control over financial policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects financial controls systemover financial reporting and such adequate internal reporting were operating effectivelyas at March 31 internalfinancialcontrols over financial st 2021 based on the internalcontrol over financial reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Rajan Uppal
Partner
Place of signature : New Delhi (Membership No. : 097379)
Date : 29th June 2021 UDIN: 21097379AAAACQ3928

Annexure-Ill

COMPLIANCE CERTIFICATE

We have conducted the audit of annual accounts of Housing and Urban DevelopmentCorporation Limited for the year ended 31 st March 2021; in accordance withthe directions / sub-directions issued by the C&AG of India under Section 143(5) ofthe Companies Act 2013 and certify that we have complied with all the Directions /Sub-directions issued to us.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Rajan Uppal
Place of signature : New Delhi Partner
Date : 29th June 2021 (Membership No. : 097379)

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