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Housing & Urban Development Corporation Ltd.

BSE: 540530 Sector: Financials
NSE: HUDCO ISIN Code: INE031A01017
BSE 00:00 | 24 Jan 42.85 0.60
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NSE 00:00 | 24 Jan 42.90 0.65
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OPEN 42.35
PREVIOUS CLOSE 42.25
VOLUME 132899
52-Week high 47.70
52-Week low 28.70
P/E 5.28
Mkt Cap.(Rs cr) 8,578
Buy Price 42.85
Buy Qty 1.00
Sell Price 42.85
Sell Qty 50.00
OPEN 42.35
CLOSE 42.25
VOLUME 132899
52-Week high 47.70
52-Week low 28.70
P/E 5.28
Mkt Cap.(Rs cr) 8,578
Buy Price 42.85
Buy Qty 1.00
Sell Price 42.85
Sell Qty 50.00

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 andUrban Development Corporation Limited ("the Company") which comprise theBalance Sheet as at 31st March 2019 and the Statement of Profit and Loss(including Other Comprehensive Income) the statement of changes in equity and theStatement of Cash Flows for the year then ended and notes to the Standalone FinancialStatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as "the Standalone Financial Statements").

2. In our opinion and to the best of our information and according tothe explanations given to us the aforesaid standalone financial statements give theinformation required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the Indian Accounting Standardsprescribed under section 133 of the Act read with the Companies (Indian AccountingStandards) Rules 2015 as amended ("Ind AS") and other accounting principlesgenerally accepted in India of the state of affairs of the Company as at 31stMarch 2019 and its profit including other comprehensive income changes in equity andits cash flows for the year ended on that date.

Basis for Opinion

3. We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) specified under Section 143(10) of theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the Standalone Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Companies Act 2013 and the rules thereunder and we have fulfilledour other ethical responsibilities in accordance with these requirements and the Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our opinion on the standalone financial statements.

Emphasis of Matter:

4. We draw attention to the following matter in the Notes to theStandalone financial statements:

i) The company has recognized interest income on "No Lien AGPAccount" amounting to Rs 26.62 crore [26.24 crore for the previous year ended 31stMarch 2018] for the year ended 31st March 2019. The same has been shown inNote 28(Other Income) under head ‘Interest on Construction Project'.

The balance outstanding as at the end of the year is र 431.18 crore(debit) in "No Lien AGP Account". The company is in discussion with MoHUA forrecovery/reimbursement of outstanding amount as well as booking of expenses. [Refer Para 5of Note 40]

Our opinion is not modified in respect of this matter.

Key Audit Matters

5. Key Audit Matters are those matters that in our professionaljudgment were of most significance in our audit of the standalone financial statements ofthe current period. These matters were addressed in the context of our audit of theStandalone financial statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. We have determined the matters describedbelow to be the key audit matters to be communicated in our report:

Sr. No. Key Audit Matter Auditor's Response
1. As described in Note 39 to the standalone financial statements these financial statements for the year ended 31st March 2019 are the first financial statements prepared in accordance with Ind AS. Principal Audit Procedures Our procedures included but were not limited to the following:
The major impact of Ind AS implementation is on accounting internal for Financial Instruments on application of Ind AS 109 Financial Instruments. The application and transition to this accounting standard is complex and is an area of focus in the audit. Ind AS 109 on Financial Instruments Establishes a comprehensive framework for determining expected credit losses accuracy of classification recognition derecognition and measurement requirements for all the financial assets and liabilities. Considering the materiality of the amounts involved the significant management judgement required in estimating the expected credit losses as well as measuring Financial Assets and Financial Liabilities and such estimates and judgements being inherently subjective this matter has been identified as a key audit matter for the current year audit. (Refer Notes: 6 7 8 9 1011 15 16 17 18 19 33 36 37 & 39) We assessed the Company's process to identify the impact of adoption of the Ind AS 109 - Financial Instruments. Our Audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
• Evaluated the design of internal controls relating to implementation of the Ind AS 109-Financial Instruments.
• Obtained an understanding of the systems processes and controls implemented by management for recording and calculating Expected credit losses (ECL) recognition derecognition and measurement of Financial Assets as well as Financial Liabilities and for classifying financial assets portfolio into stages based on credit risk.
• Discussed with appropriate senior management and consultant engaged by the company 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.
• Evaluated the cumulative effect of adjustments as at transition date for compliance with the Ind AS 109 on Financial Instruments.
• Tested the relevant information technology systems access and 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.

Other Information

6. The Company's management and Board of Directors are responsible forthe other information. The other information comprises the information included in theCompany's Annual Report but does not include the standalone financial statements and ourauditor's report thereon. The Annual report for the year ending 31st March2019 is expected to be made available to us after the date of this auditor's report.

Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.

If based on the work we have performed we conclude that there is amaterial misstatement of this other information we are required to report that fact. Wehave nothing to report in this regard.

Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements

7. The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance other Comprehensive income Changes inEquity and Cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian accounting Standards (Ind ASs) specifiedunder Section 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 ofDirectors is responsible for assessing the Company's ability to continue as a goingconcern disclosing as applicable matters related to going concern and using the goingconcern basis of accounting unless Board of Directors either intends to liquidate thecompany or to cease operations or has no realistic alternative but to do so.

9. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's Responsibilities for the Audit of the StandaloneFinancial Statements.

10. Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these Standalone Financial Statements.

11. As Part of an audit in accordance with SAs we exerciseprofessional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of theStandalone Financial Statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof the internal control.

• Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. Undersection 143(3)(i) of the Companies Act 2013 we are also responsible for expressing ouropinion on whether the company has adequate internal financial controls with reference toStandalone Financial Statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the Standalone Financial Statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and contents of theStandalone Financial Statements including the disclosures and whether the StandaloneFinancial Statements representing the underlying transactions and events in a manner thatachieves fair representation.

12. We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.

13. We also provide those charged with governance with a statement thatwe have complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto

bear on our Independence and where applicable related safeguards.

14. From the matters communicated with those charged with governancewe determine those matters that were of most significance in the audit of the StandaloneFinancial Statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would 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 of the Act we give in the Annexure- "A" a statement on thematters specified 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 Acton the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us in the Annexure‘B' on the directions issued by the Comptroller and Audit 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

b) In our opinion proper books of accounts as required by law havebeen kept by the Company in so far as it appears from our examination of those books.

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

d) In our opinion the aforesaid Standalone Financial Statements complywith the Indian Accounting Standard ("Ind-As") specified under Section 133 ofthe Act;

e) The provisions of section 164(2) in respect of disqualifications ofdirectors of the Companies Act 2013 are not applicable to the Company being GovernmentCompany in terms of notification no. G.S.R. 463(E) dated 5th June 2015 issuedby the Ministry of Corporate Affairs.

f) With respect of the adequacy of the Internal Financial Controls overfinancial reporting of the Company and the operating effectiveness of such controls referto our separate report in Annexure ‘C'; and

g) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 inour opinion and to the best of our information and according to the explanations given tous:-

i. The Company has disclosed the impact of pending litigations on itsfinancial position on its Standalone Financial Statements; (Refer Para 4 (a) of Note no40)

ii. The Company does not have any material foreseeable losses on longterms contracts including derivative contracts (Refer Para 38 of Note no 40);

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company; (Refer Para 18of Note no 40).

NHB Directions

18. The Company is complying with National Housing Bank's (NHB) creditconcentration norms in respect of loans to private sector agencies. However in case ofloans to State Governments/State Governments Agencies/Central Government Agencies thesaid norms have been relaxed by the NHB vide various letters (Refer Para no.17 of Note No.40); the same is complied with except in case of Investment in equity shares of HousingFinance Company lndbank Housing Limited (Investee company) where investment in 25% ofequity capital of investee company has been made instead of prescribed limit of 15%.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Prem Behari Gupta
Place of Signature : New Delhi Partner
Date : 24th May 2019 (Membership No. 080245)

ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT

(Annexure referred to in Paragraph "15" under ‘Report onOther Legal and Regulatory Requirements' section of our report of even date to themembers of Housing and Urban Development Corporation Limited on the Standalone FinancialStatements for the year ended March 31st 2019).

(i) . In respect of Fixed Assets:

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

b) As per information and explanation given to us there is a regularprogramme of physical verification of all fixed assets once every year which in ouropinion is reasonable having regard to the size of the company and the nature of itsassets. In our opinion and as per the information given by the management thediscrepancies observed were not material and have been appropriately accounted for in thebooks.

c) The title / lease deeds of the immovable properties are held in thename of the Company except in case of Leasehold Land/ Flats/ building/ measuring 11521.53square meters having cost of र 33.99 crores and Freehold Land/ flats/ building measuring5718.03 square meters having cost of र 6.51 crores of which title/ lease deeds arepending for execution in the name of the Company.

(ii) . The nature of business of the company does not require it tohave any inventory. Hence the requirements of clause (ii) of

Paragraph 3 of the said order are not applicable to the Company.

(iii) . According to the information and explanation given to us theCompany has not granted any loans secured or unsecured to any companies firm limitedliability partnerships or other parties covered in the register required to be maintainedunder section 189 of the Companies Act 2013 (‘the Act'). Hence reporting underclauses (iii) (a) (b) and (c) is not applicable to the Company.

(iv) . In our opinion and according to the information and explanationgiven to us the Company has not granted any loans or provided any guarantees or securityto the parties covered under Section 185 of the Act. The Company has complied with theprovisions of Section 186 of the Act in respect of Investments made or loans or guaranteeor security provided to the parties covered under Section 186.

(v) . The Company has accepted deposits from public. In our opinion andaccording to the information and explanation given to us the company during the yearhas complied with the directives issued by the National Housing Bank under the HousingFinance Companies (NHB) Directions 2010 with regard to deposits accepted from the publicand the rules framed thereunder; and the provision of Section 73 to 76 and other relevantprovision of the Companies Act 2013 and the rules framed there under.

(vi) . According to the information and explanations given to us theCentral Government has not prescribed the maintenance of cost records under sub section(1) of Section 148 of the Companies Act 2013 in respect of the business of the Company.

(vii) . a) According to the information and explanations given to usand according to the records produced before us for verification the company hasgenerally been regular in depositing with appropriate authorities the undisputedstatutory dues including Provident fund Income tax Wealth tax GST and any OtherStatutory dues applicable to it;

b) According to the information and explanations given to us noundisputed amounts payable in respect of Income Tax Sales Tax/ Value Added Tax ServiceTax GST and any other material statutory dues were in arrears as at 31stMarch 2019 for a period of more than six months from the date they became payable;

c) According to the information and explanations given to us theIncome tax wealth tax and services taxes dues which are pending on account of dispute areas under:

Name of the Statue Nature of Dues Amount (in ' crores) Period to which amount relates Forum where the dispute is pending
Income Tax Act 1961 Disputed Income-tax demand 25.60# AY 1996-97 AY 1998-1999 and AY 2007-08 Add. CIT and High Court
Income Tax Act 1961 Disputed Income-tax demand 94.13# AY 1998-99 to AY 2001-02 AY 2004-05 and AY 2015-16 ITAT and Add. CIT
Income Tax Act 1961 Disputed Income- tax demand 38.21# AY 2010-11 to AY 2012-13 and AY 2014-15 ITAT
Income Tax Act 1961 Disputed Income-tax demand 32.34# AY 2013-14 and AY 2016-17 CIT(A)
Income Tax Act 1961 Disputed Income-tax demand 8.78# AY 2002-03 to AY 2003-04 Add. CIT
Income Tax Act 1961 Disputed Income-tax demand 87.95# AY 2005-06 to AY 2009-10 Add. CIT ITAT and Supreme Court
Income Tax Act 1961 Disputed Income-tax demand 13.39# AY 1997-98 CBDT and Add. CIT
Name of the Statue Nature of Dues Amount (in ' crores) Period to which amount relates Forum where the dispute is pending
Wealth Tax Act 1957 Wealth Tax and Interest 0.01@ AY 1995-96 Add. CIT
Service Tax - Finance Act 1994 Disputed Service tax demand 2.07* FY 2007-08 to FY 2012-13 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 1.28* FY 2005-06 to FY 2008-09 CESTAT
Total 306.25

# Against disputed Income tax demand amounting to र 300.40 crore र296.18 crore has been adjusted by authorities or paid by the Company under protest fromtime to time and remaining र 4.22 crore has not been paid.

@ Wealth tax demand amounting to र 0.01 crore paid under protest by theCompany.

* In respect of disputed Service Tax demand amounting to र 5.84 croreर 2.63 crore has been paid by the Company under protest from time to time and remaining र3.21crore has not been paid.

d) According to the information and explanations given to us theamount which was required to be transferred to Investor Education and Protection Fund inaccordance with sub section (5) of section 125 of the Companies Act 2013 has beentransferred. The unclaimed amount lying in other financial liabilities includes interestof र 0.05 crore as on March 31st 2019 which have lapsed 7 years from therespective due dates of interest payment and not transferred to IEPF since 7 years fromthe maturity date of bonds / deposits / debentures has not been completed yet. (Refer Para18 of Note 40).

(viii) . In our opinion and as per the information and explanationsgiven to us the company has not defaulted in repayment of dues to financial institutionsbanks and Government or debenture holders;

(ix) . According to the information and explanation given to us thecompany has raised the money through bonds issue and term loan.

The proceeds of such bonds issue and terms loan have been utilized forthe purpose for which they were issued.;

(x) . According to the information and explanation given to us and asrepresented by the management and based on our examination of the books and records of theCompany and in accordance with the Generally Accepted Auditing Practices in India no caseof frauds by the Company or on the Company by its officers or employees has been noticedor reported during the year;

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

(xii) . In our opinion and according to the information andexplanations given to us the Company is not a Nidhi Company and hence the requirement ofclause 3(xii) of the order is not applicable;

(xiii) . In our opinion and according to the information andexplanation given to us transactions during the year with related parties were approvedby the Audit Committee and are in compliance with Section 177 of the Companies Act 2013where applicable and since the said transactions were in the ordinary course of businessof the Company and were at arm length basis the provisions of Section 188 are notapplicable and the details have been disclosed in the Standalone Financial Statements asrequired by the applicable Indian Accounting Standards (Ind AS);

(xiv) . According to the information and explanations given to us thecompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year under review;

(xv) . In our opinion and according to the information and explanationsgiven to us the company has not entered into any non – cash transaction withdirector or persons connected with him;

(xvi) . According to the information and explanations given to us thecompany is not required to be registered under Section 45-IA of the

Reserve Bank of India Act 1934. However the Company being a HousingFinance Company is registered with National Housing Bank vide Registration No. 01.0016.01by which NHB has granted status of Housing Finance Company (HFC) to the Company on 31stJuly 2001.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Prem Behari Gupta
Place of Signature : New Delhi Partner
Date : 24th May 2019 (Membership No. 080245)

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Annexure referred to in paragraph "16" under ‘Report onOther Legal and Regulatory Requirements' section of our report of even date to themembers of Housing and Urban Development Corporation Limited on the Standalone FinancialStatements for the year ended 31st March 2019)

Directions indicating the areas to be examined by the StatutoryAuditors during the course of audit of annual accounts of Housing and Urban DevelopmentCorporation Limited for the year 2018-19 issued by the Comptroller and Auditor General ofIndia under section 143(5) of the Companies Act 2013

Sr. AREAS TO BE EXAMINED No. REPLY FOR THE AREAS EXAMINED
1. Whether the Company has system in place to process all the accounting transactions through IT systemर If yes the implications of processing of accounting transactions outside The Company has the system in place to process all the accounting transactions through IT systems with some exceptions.
IT system on the integrity of the IT system on the integrity of the accounts along with the financial implications if any may be stated. 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. Company is also in the 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's inability to repay the loanर If yes the During the F/y 2018-19 no cases of restructuring of an existing loan or cases of waiver/write off of debts/ loans/interest etc. made by a lender to the company has been observed.
financial impact may be stated. However company has restructured 7 loan accounts
amounting र 998.38 crores. Out of the 7 accounts 2 accounts have been closed due to receipt of payments .The principal outstanding as on 31st March 2019 was र 438.90 crores in respect of restructured loan accounts.
Further during the year under audit company has waived off/ written off of debts/ loans/interest etc. due to the borrower's inability to repay the loan on account of default resolution in 3 loan accounts amounting to र 81.10 crores.
3. Whether funds received/ receivable for specific schemes from Central/State agencies were properly accounted for/ utilized as per its term and conditionsर List the cases of deviation. On the basis of selective audit procedures we have observed that the funds received/ receivable for specific schemes from Central/State agencies were properly accounted for /utilized as per its term and conditions.
For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Prem Behari Gupta
Place of Signature : New Delhi Partner
Date : 24th May 2019 (Membership No. 080245)

ANNEXURE "C" TO THE INDEPENDENT AUDITOR'S REPORT OF EVENDATE ON THE STANDALONE FINANCIAL STATEMENTS OF HOUSING AND URBAN DEVDELOPMENT CORPORATIONLIMITED FOR THE YEAR ENDED 31st MARCH 2019

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

1. We have audited the internal financial controls over financialreporting of HOUSING AND URBAN DEVELOPMENT CORPORATION LIMITED ("the Company")as of March 31st 2019 in conjunction with our audit of the Standalonefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing andmaintaining Internal Financial Controls based on "the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India". Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor's Responsibility

3. Our responsibility is to express an opinion on the Company'sInternal Financial Controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the "Guidance Note") and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of Internal Financial Controls both applicable to anaudit of Internal Financial Controls and both issued by the Institute of CharteredAccountants of India. 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.

4. Our audit involves performing procedures to obtain audit evidenceabout the adequacy of the Internal Financial Controls system over financial reporting andtheir operating effectiveness. Our audit of internal financial controls over financialreporting included obtaining an understanding of internal financial controls overfinancial reporting assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgment including theassessment of the risks of material misstatement of the Standalone Financial Statementswhether due to fraud or error.

5. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

6. A Company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial 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 company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonable^assurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls over FinancialReporting

7. Because of the inherent limitations of internal financial controlsover financial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects anadequate internal financial controls system over financial reporting and such internalfinancial controls over financial reporting were operating effectively as at March 31st2019 based on the internal control over financial reporting criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote on Audit of Internal Financial Controls Over Financial Reporting issued by theInstitute of Chartered Accountants of India.

For Prem Gupta & Company
Chartered Accountants
(Firm Registration No. 000425N)
Sd/-
Prem Behari Gupta
Place of Signature : New Delhi Partner
Date : 24th May 2019 (Membership No. 080245)