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Housing Development Finance Corporation Ltd.

BSE: 500010 Sector: Financials
NSE: HDFC ISIN Code: INE001A01036
BSE 00:00 | 24 Apr Housing Development Finance Corporation Ltd
NSE 05:30 | 01 Jan Housing Development Finance Corporation Ltd
OPEN 1610.00
PREVIOUS CLOSE 1662.50
VOLUME 283950
52-Week high 2499.65
52-Week low 1473.10
P/E 14.87
Mkt Cap.(Rs cr) 273,551
Buy Price 1585.00
Buy Qty 74.00
Sell Price 1586.80
Sell Qty 7.00
OPEN 1610.00
CLOSE 1662.50
VOLUME 283950
52-Week high 2499.65
52-Week low 1473.10
P/E 14.87
Mkt Cap.(Rs cr) 273,551
Buy Price 1585.00
Buy Qty 74.00
Sell Price 1586.80
Sell Qty 7.00

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


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Company auditors report

TO THE MEMBERS OF

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED

Report on the audit of the standalone financial statements

Opinion

We have audited the standalone financial statements of Housing Development FinanceCorporation Limited (the ‘Corporation’) which comprise the Standalone Balancews for the year Sheet as at 31 March 2019 the Standalone Statement of Profit

Loss (including Other Comprehensive Income) the Standalone Statement of Changes inEquity and Statement of Cash Flows for the year then ended and notes to the standalonefinancial statements including a summary of the significant accounting policies and otherexplanatory information. In our opinion and to the best of our information and accordingto the explanations given to us the aforesaid standalone financialstatements 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 accounting principlesgenerally accepted in India of the state of affairs of the Corporation as at 31 March2019 and profit and other comprehensive income changes in equityanditscash ended on thatdate.

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 SAs arefurther described in the Auditor’s Responsibilities for the audit of the standalonefinancial statements section of our report. We are independent of the Corporation inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (‘ICAI’) together with the ethical requirements that are relevant to ouraudit of the standalone financial statements under the provisions of the Act and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the ICAI Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide and a basis for our opinion.

Key audit matters

Key audit matters are those matters that in our professional judgement 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.

Information Other than the Standalone Financial Statements and Auditors’ ReportThereon

The Corporation’s management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in theDirector’s report and Management Discussion & Analysis (MD&A) report butdoes not include the standalone financial statements and our auditor’s reportthereon. The Director’s report and MD&A report is expected to be made availableto us after the date of this auditor’s report.

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

In connection with our audit of the standalone financial statements our responsibilityis to read the other information when it becomes available and in doing so considerwhether the other information is materially inconsistent with the standalone financialstatements or our knowledge obtained in the audit or otherwise appears to be materiallymisstated.

Management’s responsibility for the standalone financial statements

The Corporation’s management and Board of Directors are responsible for thematters stated in Section 134 (5) of the Act with respect to the preparation of thesestandalone financial statements that give and fair view of the state of affairsprofit/loss and other comprehensive income changes in equity and cash flows of theCorporation in accordance with the accounting principles generally accepted in Indiaincluding the Ind AS specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Corporation and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone financial a true statements management and Board ofDirectors are responsible for assessing the Corporation’s ability to continue as agoing concern disclosing as applicable matters related to going concern and using thegoing concern basis of accounting unless management either intends to liquidate theCorporation or to cease operations or has no realistic alternative but to do so.

Board of Directors is also responsible for overseeing the Corporation’s financialreporting process.

Auditor’s 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. Reasonableassurance is a high level of assurance but is not a guarantee that an audit conducted inaccordance with SAs will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these standalone financial statements.

As part of an audit in accordance with SAs we exercise professional judgement andmaintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the 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 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 Corporationhas adequate internal financialcontrols with reference to fi nancial statements in placeand the operating effectiveness of 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCorporation’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 conditionsmay cause the Corporation to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the fi statementsis based on standalone financial statements including the disclosures and whether thestandalone financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant any significant encies in internalcontrol that we identify during our audit. We also provide those charged with governancewith a statement that we have complied with relevant ethical requirements regardingindependence and to communicate with them all relationships and other matters that mayreasonably be thought to bear on our independence and where applicable relatedsafeguards. From the matters communicated with those charged with governance we determinethose matters that were of most significance in the audit of the standalonefinancialstatements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor’s report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefitsof suchcommunication.

Other matters

1. The opening balance sheet as at 1 April 2017 (‘transition date’) includedin these standalone the previously issued statutory standalone financial statements of theCorporation prepared in accordance with the applicable Accounting Standards as per section133 of the Act read with relevant rules thereunder audited by the predecessor auditorwhose report for the year ended 31 March 2017 audit dated 4 May 2017 expressed findingsincluding an opinion on those standalone financialstatements as adjusted for thedifferences in the accounting principles adopted by the Corporation on transition to IndAS which have been audited by us.

2. During the year ended 31 March 2018 G r a n d e u r Properties Private LimitedHaddock Properties Private Limited Pentagram Properties Private Limited WinchesterProperties Private Limited and Windermere Properties Private Limited (collectivelyreferred to as ‘Transferor Companies’) were amalgamated with the Corporation on28 March 2018 with the appointed date of 1 April 2016. The transition date balance sheetof the Corporation includes financial information of the aforesaid Transferor Companieswhich is based on the financial statements of such Transferor Companies prepared inaccordance with the applicable Accounting Standards as per section 133 of the Act readwith relevant rules thereunder audited by the respective auditors of such TransferorCompanies whose reports for the year ended 31 March 2017 dated 28 April 2017 respectivelyexpressed unmodified opinions on the respective financial as adjusted for the differencesin the accounting principles adopted by the Corporation on transition to Ind AS whichhave been audited by us.

3. The comparative financial information for the year ended 31 March 2018 forming partof these standalone financial statements includes unaudited financial information ofTransferor Companies. We did not audit the financial information of the aforesaidTransferor Companies whose financial information reflect total asset ofRs. 99 crorestotal revenue of Rs. 30 crores and cashflows ofRs. 15 crores. We have been provided withthe financial information of the aforesaid Transferor Companies for the period from 1April 2017 to 28 March 2018 by management of the Corporation as adjusted for thedifferences in the accounting principles adopted by the Corporation on transition to IndAS which have been audited by us.

Our opinion on the standalone financial statements is not modified in respect of theabove matters.

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 in terms of Section 143 (11) of theAct we give in the ‘Annexure A’ a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

A. As required by Section 143(3) of the Act we report that:

a) we hav statements e sought and obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purposes of our audit;

b) in our opinion proper books of account as required by law have been kept by theCorporation so far as it appears from our examination of those books;

c) the Standalone Balance Sheet the Standalone Statement of Profit and Loss (includingother comprehensive income) the Standalone Statement of Changes in Equity and theStandalone Cash Flow Statement dealt with by this Report are in agreement with the booksof account;

d) in our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act;

e) on the basis of the written representations received from the Directors and taken onrecord by the Board of Directors none of the Directors are disqualifiedas on 31 March2019 from being appointed as a Director in terms of Section 164 (2) of the Act; and f)with respect to the adequacy of the internal financial controls with reference tofinancial statements of the Corporation and the operating effectiveness of such controlsrefer to our separate Report in ‘Annexure B’; B. With respect to the othermatters to be included in the Auditor’s Report in accordance with Rule 11 of theCompanies (Audit and Auditors) Rules 2014 in our opinion and to the best of ourinformation and according to the explanations given to us:

i. the Corporation has disclosed the impact of pending litigations as at 31 March 2019on its financial position in its standalone financial statements Refer note 40 to thestandalone financial statements;

ii. the Corporation has recognised provision as required under the applicable law oraccounting standards for material foreseeable losses if any on long-term contractsincluding derivative contracts Refer note 7.1 to the standalone financial statements;

iii. there has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Corporation. Whilst the Corporationtransferred the unclaimed dividend 12 underlying equity shares relating to such unclaimeddividend could not be transferred as the depository participant informed that theaforesaid equity shares were not available in the demat accounts of the respectiveshareholders; and iv. the disclosures in the standalone regarding financial holdings aswell as dealings in specified bank notes during the period from 8 November 2016 to 30December 2016 have not been made in these standalone financial statements since they donot pertain to the financial ended 31 March 2019.

C. With respect to the matter to be included in the Auditor’s Report under Section197(16):

In our opinion and according to the information and explanations given to us theremuneration paid by the Corporation to its Directors during the current year is inaccordance with the provisions of Section 197 of the Act. The remuneration paid to anyDirector is not in excess of the limit laid down under Section 197 of the Act. TheMinistry of Corporate Affairs has not prescribed other details under Section 197(16) whichare required to be commented upon by us.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022 AKEEL MASTER
MUMBAI Partner
13 May 2019 Membership No: 046768

Annexure "A" to the Independent Auditor’s Report - 31 March 2019

(Referred to in our report of even date)

i. (a) The Corporation has maintained proper records showing full particularsincluding quantitative details and situation of property plant and equipment.

(b) The Corporation has a regular programme of physical verification property plantand equipment are verifiedannually. In our opinion this periodicity of physicalverification reasonable having regard to the size of the Corporation and the nature of itsassets. No material discrepancies were noticed on such verification.

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

Particulars of land and building Rs. in crore Remarks
Freehold land and buildings (Two properties) Gross block 114 The Corporation is in the process of transferring these asset in its name. The process will be concluded after the necessary regulatory clearances have been obtained.
Net block 105

In respect of immovable properties of land and buildings that have been taken on leaseand disclosed as property plant and equipment in the standalone financial statements thelease agreements are in the name of the Corporation where the Corporation is the lesseein the agreement.

ii. The Corporation is engaged in providing financial services primarily into housing

Accordingly it does not hold any physical inventories. Thus paragraph 3 (ii) of theOrder is not applicable.

iii. According to the information and explanations given to us and based on the auditprocedures conducted by us the Corporation has granted loans secured or unsecured tocompanies firms limited liability partnerships or other parties covered in the registermaintained under section 189 of the Act in respect of which:

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

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

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

iv. According to the information and explanations given to us and on the basis of ourexamination of the records of the Corporation the Corporation has complied with theprovisions of section 185 and 186 of the Act in respect of loans investments guaranteeand security as applicable.

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

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

vii. (a) According to the information and explanations given to us and on the basis ofour examination of the books of account amounts deducted/ accrued in the books of accountin respect of undisputed statutory dues including provident fund employees’ stateinsurance income tax sales tax service tax value added tax goods and services taxcess and other material statutory dues applicable to it have generally been regularlydeposited by the Corporation with the appropriate authorities. As explained to us theCorporation did not have any dues on account of Customs Duty and Excise Duty.

According to the information and explanations given to us and on the basis of ourexamination of the records no undisputed amounts payable in respect of provident fundemployees’ state insurance income tax sales tax service tax value added taxgoods and services tax cess and other material statutory dues were in arrears as at 31March 2019 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and on the basis of ourexamination of the records there are no dues of service tax value added tax and goodsand services tax that have not been deposited on account of any dispute. Howeveraccording to information and explanations given to us the following dues of wealth taxinterest on lease tax employees’ state insurance income tax and service tax havenot been deposited by the Corporation on account of disputes:

viii.According to the information and explanations given to us and on the basis of ourexamination of the records the Corporation has not defaulted in the repayment of loans orborrowings to financial institutions banks or debenture holders. The Corporation has nottaken loans or borrowings from government.

ix. According to the information and explanations given to us and based on ourexamination of the records the Corporation has applied the money raised from term loansduring the year for the purposes for which they were raised other than temporarydeployment pending application of proceeds. The Corporation has not raised money by way ofpublic offer during the year.

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

xi. According to the information and explanations given to us and based on ourexamination of the records the Corporation has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

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

xiii. According to the information and explanations given to us and based on ourexamination of the records of the Corporation all transactions with the related partiesare in compliance with section 177 and 188 of the Act where applicable and the details ofsuch transactions have been disclosed in the standalone financialstatements as requiredby the applicable accounting standards.

xiv. According to the information and explanations give to us and based on ourexamination of the records the Corporation has not made any preferential allotment andprivate placement of shares or fully or partly convertible debentures during the year.

xv. According to the information and explanations given to us and based on ourexamination of the records the Corporation has not entered into any non-cash transactionswith Directors or persons connected with them. Accordingly paragraph 3(xv) of the Orderis not applicable.

xvi. According to the information and explanation given to us the Corporation is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.Thus paragraph 3 (xvi) of the Order is not applicable to the Corporation.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022 AKEEL MASTER
MUMBAI Partner
13 May 2019 Membership No: 046768

Annexure "B" to the Independent Auditor’s Report - 31 March 2019(Referred to in our report of even date)

Report on the internal financial controls with reference to the aforesaid standalonefinancial statements under Clause (i) of Subsection 3 of Section 143 of the Companies Act2013 (the ‘Act’) (Referred to in paragraph (A.f.) under ‘Report on OtherLegal and Regulatory Requirements’ section of our report of even date)

Opinion

We have audited the internal financial controls with reference to standalone financialstatements o f H o u s i n g D e v e l o p m e n t Finance Corporation Limited (the‘Corporation’) as of 31 March 2019 in conjunction with our audit of thestandalone financial statements of the Corporation for the year ended on that date.

In our opinion the Corporation has in all material respects adequate internalfinancial controls with referencetofinancial such internal financial controls wereoperating effectively as at 31 March 2019 based on the internal financial controls withreference to financial statements criteria established by the Corporation 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 (the ‘Guidance Note’).

Management’s responsibility for internal financial

The Corporation’s management and the Board of Directors are responsible forestablishing and maintaining internal financial based on the internal financial controlswith reference to financial statements criteria established by the Corporation consideringthe essential components of internal control stated in the Guidance Note. 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 Corporation’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.

Auditor’s responsibility

Our responsibility is to express an opinion on the Corporation’s internalfinancial controls with reference to financial statements based on our audit. We conductedour audit in accordance with the Guidance Note and the Standards on Auditing prescribedunder Section 143 (10) of the Act to the extent applicable to an audit of internalfinancial controls with reference to financial statements. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements were established and maintained and whether suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls with reference to financialstatements and their operatingeffectiveness. Our audit of internal financialcontrols with reference to financialstatements included obtaining an understanding of such internal financialcontrolsassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal financial control based on the assessed risk. Theprocedures selected depend on the auditor’s judgement including the assessment ofthe risks of material misstatement of the standalone financial statements whether due tofraud or error. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Corporation’s internalfinancial controls with reference to financial statements.

Meaning of internal financial controls with reference to financial statements

A company’s internal financial controls with reference to financial statements isa process 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 financialcontrols with reference to financial statements include 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) providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial 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 thefinancial statements.

Inherent limitations of internal financial controls with reference to financialstatements

Because of the inherent limitations of internal financial reference to financialstatements 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 with reference tofinancial statements to future periods are subject to the risk that the internal financialcontrols with reference to financial statements may become inadequate because of changesin conditions or that the degree of compliance with the policies or controls withprocedures may deteriorate.

For B S R & Co. LLP
Chartered Accountants
Firm’s Registration No: 101248W/W-100022 AKEEL MASTER
MUMBAI Partner
13 May 2019 Membership No: 046768