You are here » Home » Companies » Company Overview » PNB Housing Finance Ltd

PNB Housing Finance Ltd.

BSE: 540173 Sector: Financials
NSE: PNBHOUSING ISIN Code: INE572E01012
BSE 00:00 | 14 Oct 639.05 -10.50
(-1.62%)
OPEN

649.75

HIGH

651.15

LOW

634.80

NSE 00:00 | 14 Oct 638.65 -10.65
(-1.64%)
OPEN

652.00

HIGH

652.00

LOW

634.60

OPEN 649.75
PREVIOUS CLOSE 649.55
VOLUME 16552
52-Week high 924.00
52-Week low 315.85
P/E 11.96
Mkt Cap.(Rs cr) 10,773
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 649.75
CLOSE 649.55
VOLUME 16552
52-Week high 924.00
52-Week low 315.85
P/E 11.96
Mkt Cap.(Rs cr) 10,773
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

PNB Housing Finance Ltd. (PNBHOUSING) - Auditors Report

Company auditors report

To the Members of PNB Housing Finance Limited

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

We have audited the standalone financial statements of PNB Housing Finance Limited("the Company") which comprise the Balance Sheet as at March 31 2020 theStatement of Profit and Loss (including Other Comprehensive Income) Statement of Changesin Equity and the Statement of Cash Flow for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "the standalonefinancial statements").

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") other accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and its profit changes inequity and its cash flow for the year ended on that date.

BASIS FOR OPINION

We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India (ICAI) togetherwith the ethical requirements that are relevant to our audit of the standalone financialstatements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion on the standalone financial statements.

EMPHASIS OF MATTER

We draw your attention to Note 45 to the standalone financial statements which explainsthe uncertainties and the management's assessment of the financial impact due to thelock-downs and other restrictions and conditions related to the Covid-19 pandemicsituation for which a definitive assessment of the impact in the subsequent period ishighly dependent upon circumstances as they evolve. Further pursuant to the Reserve Bankof India (‘RBI') Covid-19 Regulatory Package the Company has offered a moratorium onthe payment of instalments to all eligible borrowers classified as standard as on February29 2020. As a result ageing of the accounts which have opted for moratorium has beendetermined with reference to days past due status as of February 29 2020.

Our opinion is not modified in respect of this matter.

KEY AUDIT MATTERS

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 report.

Key Audit Matter Our response to the Key Audit Matter
Impairment of loans to customers Our audit procedures included testing the design and operating effectiveness of key controls across the processes relevant to the ascertainment and measurement of ECL. These controls/ processes included the allocation of assets into stages model governance data accuracy and completeness credit monitoring multiple economic scenarios post model adjustments individual provisions and disclosures and accounting thereof.
The Company reported total gross loans of C 68434.30 crore and Rs.1765.62 crore of expected credit loss provisions as on March 31 2020 (Refer Note 6).
Key judgements and estimates (Refer Note 2.20) in respect of the timing and measurement of expected credit losses (ECL) include: Allocation of assets to stage 1 2 or 3 using criteria in accordance with the Indian Accounting Standard 109; Accounting interpretations and modelling assumptions used to build the models that calculate the ECL;
The criteria used to allocate an asset to stage 1 2 or 3 in accordance with Ind AS 109 was evaluated. Assets in stage 1 2 and 3 were reviewed to verify that they were allocated to the appropriate stage.
Completeness and accuracy of data used to calculate the ECL; With the support of the team of modelling specialists employed by the Company to make the models we tested the assumptions inputs and formulas used in a sample of ECL models. This included assessing the appropriateness of model design and formulas used the ‘Probability of Default' ‘Loss Given Default' ‘Exposure at Default' historical loss rates used and the valuation of collateral.
Inputs and assumptions used to estimate the impact of multiple economic scenarios; To verify data quality calculation of the data used in the ECL was tested by reconciling to source systems. To test credit monitoring risk ratings were checked for a sample of performing loans.
Completeness and valuation of post model adjustments; Appropriateness of forecasted macroeconomic variables such as GDP Money supply and House Price Index were evaluated.
Measurements of individually assessed provisions including the assessment of multiple scenarios; and Accuracy and adequacy of the financial statement disclosures. The completeness and appropriateness of post model adjustments was assessed. The adequacy and appropriateness of disclosures for compliance with the Ind AS including disclosure of Ind AS 107 was ascertained.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITORS' REPORT THEREON

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the AnnualReport for example Management Discussion and Analysis Board's Report includingAnnexures to Board's Report Business Responsibility Report Corporate Governance andShareholder's Information but does not include the consolidated financial statementsstandalone financial statements and our auditors' report thereon.

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

In connection with our audit of the financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained during thecourse of our audit or otherwise appears to be materially misstated.

The other information is expected to be made available to us after the date of thisauditors' report. When we read the other information if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.

RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONEFINANCIAL STATEMENTS

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the Ind AS 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 Company 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 the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so.

The Board of Directors is also responsible for overseeing the Company's financialreporting process.

AUDITORS' RESPONSIBILITIES FOR THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

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.

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 standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the companyhas adequate internal financial controls system in place and the operating effectivenessof such controls.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.

Materiality is the magnitude of misstatements in the standalone financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and

(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.

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

We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. 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 ‘I' a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

2. As required by section 143(3) of the Act based on our audit 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 purpose of our audit.

(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss (including Other ComprehensiveIncome) Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with the IndAS specified under section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.

(e) On the basis of written representations received from the directors as on March 312020 and taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of section 164 (2) of theAct.

(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate report in Annexure ‘II'.

(g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the Company to its directors during the year is inaccordance with the provisions of section 197 of the Act.

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

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements – Refer Note 37(i) to the standalonefinancial statements;

ii. The Company did not have any long term contracts including any derivative contractsfor which there were any material foreseeable losses;

iii. The Company has generally been regular in depositing the amounts required to betransferred to the Investor Education and Protection Fund.

For B R Maheswari & Co LLP
Chartered Accountants
Firm's Registration No. 001035N/N500050
Akshay Maheshwari
Partner
Membership No.504704
UDIN: 20504704AAAADI3962
Place: New Delhi
Date: June 13 2020

Annexure'I' to the Independent Auditors' Report

(Referred to in Paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date)

1) I n respect of its fixed assets:

(Ta) he Company has maintained proper showing full particulars including quantitativedetails and situation of fixed assets.

(As informed fixed assets have been physicallyb) verified by the management in aphased periodical manner which in our opinion is reasonable having regard to the size ofthe Company and nature of its assets. No material discrepancies were noticed on suchverification.

(Based upon the audit procedure performed andc) according to the records of theCompany the title deeds of all the immovable properties are held in the name of theCompany.

2) The provisions of paragraph (ii) of the order are not applicable to the Company asthe Company is engaged in the financial services sector.

3) As informed the Company has not granted any loans secured or unsecured tocompanies firms Limited Liability Partnerships or other parties covered in the registermaintained under section 189 of the Act for the financial year 2019-2020 and accordinglyclauses (a) (b) and (c) of para (iii) of the order are not applicable.

4) As informed the Company has complied with the provisions of section 185 and 186 ofthe Act in respect of loans investments guarantees and security.

5) In our opinion and according to the information and explanations given to us theCompany has complied with the directives issued by the Reserve Bank of India provisionsof section 73 to 76 and other relevant provisions of the Act the Companies (Acceptance ofDeposit) Rules 2014 to the extent applicable and The Housing Finance Companies (NHB)Directions 2010 with regard to acceptance of deposits from the public. No order has beenpassed by the Company Law Board or the National Company Law Tribunal or Reserve Bank ofIndia or by any other court or tribunal with regard to such deposits.

6) As informed to us the maintenance of cost records has not been prescribed by theCentral Government under section 148(1) of the Act in respect of the activities carriedon by the Company.

7) (According to the information and explanations givena) to usthe Company hasgenerally been regular in depositing with appropriate authorities undisputed statutorydues including Provident Fund Employees' State Insurance Income Tax Goods and ServiceTax Custom Duty Cess and other material statutory dues applicable to it. According tothe information and explanations given to us no undisputed amounts payable in respect ofthe aforesaid dues were outstanding as at March 31 2020 for a period of more than sixmonths from the date they become payable.

(According to the information and explanations given to us the details of disputedamount of Income Tax not depositedb) by the Company are as follows:

Name of the statute Nature of the dues Amount under dispute (Rs.in crore) Period to which the amount relates (Assessment Year) Forum where dispute is pending
Income tax Act Income tax 3.36 2018-19 CIT (A) Delhi
Income tax Act Income tax 2.51 2017-18 CIT (A) Delhi
Income tax Act Income tax 1.84 2016-17 ITAT Delhi
Income tax Act Income tax 0.23 2015-16 CIT (A) Delhi
Income tax Act Income tax 1.06 2015-16 ITAT Delhi
Income tax Act Income tax 1.96 2014-15 ITAT Delhi
Total 10.96

8) B ased on the information and explanations given to we are of the opinion that theCompany has not defaulted in repayment of loans and borrowings to the financialinstitutions banks or debenture holders. The Company did not have any outstanding loansand borrowings from government during the year.

9) B ased upon the audit procedures performed and the information and explanationsgiven by the management the Company has not raised moneys by way of initial public offeror further public offer including us debt instruments and term Loans. Accordingly theprovisions of clause 3 (ix) of the Order are not applicable to the Company.

10) T o the best of our knowledge and belief and according to the information andexplanations given to us no material fraud on the Company by its officers or employees orby the Company has been noticed or reported during the year although there have been fewinstances of loans becoming doubtful of recovery consequent upon fraudulentmisrepresentation by borrowers the amounts whereof are not material in the context andsize of the Company and the nature of its business and which have been adequately providedfor.

11) In our opinion the managerial remuneration has been paid or provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

12) In our opinion the Company is not a Nidhi company. Therefore the provisions ofclause 3 (xii) of the Order are not applicable to the Company.

13) In our opinion all transactions with the related parties are in compliance withsections 177 and 188 of the Act where applicable and the details have been disclosed inthe standalone financial statements as required by the applicable accounting standards.

14) The company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year therefore reporting underclause 3 (xiv) of the Order is not applicable.

15) According to the information and explanations given to us and on an overallexamination of the financial statements of the Company we report that the Company has notentered into any non- cash transaction with directors or persons connected with him.

16) In our opinion the Company is not required to be registered under section 45-IA ofthe Reserve Bank of India Act 1934.

For B R Maheswari & Co LLP
Chartered Accountants
Firm's Registration No. 001035N/N500050
Akshay Maheshwari
Partner
Membership No.504704
UDIN: 20504704AAAADI3962
Place: New Delhi
Date: June13 2020

Annexure'II' to the Independent Auditors' Report

(Referred to in Paragraph 2(f) under the heading "Report on other legal andregulatory requirements" of our report of even date)

Report on the Internal Financial Controls under clause (i) of sub section 3 of section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of PNB HousingFinance Limited ("the Company") as of March 31 2020 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

MANAGEMENT'S RESPONSIBILITY FOR INTERNAL FINANCIAL CONTROLS

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 ("ICAI"). 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.

AUDITORS' RESPONSIBILITY

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 andprescribed under section 143(10) of the Companies Act 2013 to the extent applicable toan audit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls over financial reporting was established and maintained and if suchcontrols operated effectively in all material respects.

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

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

MEANING OF INTERNAL FINANCIAL CONTROLS OVER FINANCIAL REPORTING

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of standalone 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 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 withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised 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 FINANCIAL REPORTING

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

OPINION

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2020 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For B R Maheswari & Co LLP
Chartered Accountants
Firm's Registration No. 001035N/N500050
Akshay Maheshwari
Partner
Membership No.504704
UDIN: 20504704AAAADI3962
Place: New Delhi
Date: June13 2020

.