17 idfc housing finance company limited · idfc housing finance company limited | 289 in terms of...

BOARD OF DIRECTORS n Dr. Rajiv B. Lall – Chairman n Mr. Vikram Limaye n Mr. Mahendra N. Shah

AUDITORS n Deloitte Haskins & Sells LLP Chartered Accountants

PRINCIPAL BANKER n HDFC Bank Limited

REGISTERED OFFICENaman Chambers, C-32, G-Block Bandra-Kurla Complex, Bandra (East)Mumbai 400 051Tel: +91 22 4222 2000Fax: +91 22 2654 [email protected]: U65922MH2014PLC253816

17 IDFC HOUSING FINANCE COMPANY LIMITED

I D F C H O U S I N G F I N A N C E C O M PA N Y L I M I T E D | 2 8 5

Directors' ReportTO THE MEMBERSYour Directors have pleasure in presenting the First Annual Report together with the audited accounts for the period March 4, 2014 (date of incorporation) to March 31, 2014.

INCORPORATIONYour Company was incorporated on March 4, 2014 and received certificate to commence business from the Registrar of Companies, Maharashtra, Mumbai on March 13, 2014.

FINANCIAL RESULTS

PARTICULARS

FOR THE PERIOD MARCH 4, 2014 TO MARCH 31, 2014

`

Total Income 320,055Less: Total Expenses 1,170,946Loss before Tax (850,891)Less: Provision for Tax (226,001)(Loss) after Tax (624,890)Add / Less: Profit / (Loss) brought forward –(Loss) carried forward (624,890)

PRINCIPAL ACTIVITIESThe main object of your Company is to carry on the business of a housing finance institution. Your Company has applied to National Housing Bank ("NHB") for obtaining certificate of registration to commence the business of a housing finance institution under Section 29A of the National Housing Bank Act, 1987.

DIVIDENDBeing the first year of operations and due to non-availability of profits for distribution, the Directors do not recommend any dividend for the period ended March 31, 2014.

COMPANIES ACT, 2013Most of the provisions of the Companies Act, 2013 and the Rules notified by the Ministry of Corporate Affairs ("MCA") in this regard, have come into force with effect from April 1, 2014. MCA issued a General Circular no. 8/2014 dated April 4, 2014 which clarified that the Financial Statements, Auditors' Report and the Board’s Report in respect of the previous year ended March 31, 2014 will be in accordance with the Companies Act, 1956 and Rules made there under. Your Company shall comply with the provisions of the Companies Act, 2013, as applicable.

DIRECTORSIn accordance with the provisions of the Companies Act, 2013, Dr. Rajiv B. Lall (DIN-00131782), Mr. Vikram Limaye (DIN-00488534) and Mr. Mahendra N. Shah (DIN-00124629), the first Directors, will retire at the ensuing Annual General Meeting and being eligible, offers themselves for reappointment.

AUDIT COMMITTEEThe Audit Committee of the Company comprises of the following:1. Dr. Rajiv B. Lall - Chairman2. Mr. Vikram Limaye3. Mr. Mahendra N. Shah

AUDITORSDeloitte Haskins & Sells LLP, Chartered Accountants, (Registration No. 117366W / W-100018) Statutory Auditors of the Company will retire at the conclusion of the ensuing AGM. The Board recommends the reappointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as the Statutory Auditors of the Company.

PUBLIC DEPOSITSThe Company has not accepted any Public Deposits under Section 58A of the Companies Act, 1956.

PARTICULARS REGARDING CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION Since your Company does not carry out any manufacturing activity, the particulars regarding conservation of energy, technology absorption and other particulars as required by the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1998, are not applicable.

286 | I D F C A N N U A L R E P O R T 2 0 1 3 - 2 0 1 4

Directors' ReportFOREIGN EXCHANGE EARNINGS AND EXPENDITUREThere was no income or expenditure in foreign currency during the period under review.

PERSONNEL AND OTHER MATTERSSince your Company does not have any employees, the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are not applicable and hence not given.

DIRECTORS’ RESPONSIBILITY STATEMENTPursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

n in the preparation of the annual accounts, the applicable accounting standards have been followed; n they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and

prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and the loss of the Company for the period ended on that date;

n proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

n the annual accounts have been prepared on a going concern basis.

ACKNOWLEDGEMENTS The Directors express their gratitude for the support and guidance received from IDFC Limited and other group companies.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

RAJIV B. LALL

Chairman

Mumbai, April 7, 2014


Independent Auditors' ReportTO THE MEMBERS OF IDFC HOUSING FINANCE COMPANY LIMITED

Report on the Financial StatementsWe have audited the accompanying financial statements of IDFC HOUSING FINANCE COMPANY LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the period from March 4, 2014 (date of incorporation) to March 31, 2014 and a summary of the significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial StatementsThe Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with the ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal controls relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:(a) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;(b) in the case of the Statement of Profit and Loss, of the loss of the Company for the period from March 4, 2014 (date of incorporation) to

March 31, 2014 and(c) in the case of the Cash Flow Statement, of the cash flows of the Company for the period from March 4, 2014 (date of incorporation) to

March 31, 2014.

Report on Other Legal and Regulatory Requirements1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government in terms of Section 227(4A) of

the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.2. As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to 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 the Company so far as it appears from our examination of

those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with

the books of account. In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act read with the General Circular 15/2013 dated September 13, 2013 of the Ministry of Corporate Affairs in respect of Section 133 of the Companies Act, 2013.

(e) On the basis of the written representations received from the directors as on March 31, 2014 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014 from being appointed as a director in terms of Section 274(1) (g) of the Act.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Firm Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

(Partner)(Membership No. 42791)



Annexure to the Auditors' Report(Referred to in paragraph 1 under ‘Report on Other Legal and Regulatory Requirements’ section of our report of even date)(i) Having regard to the nature of the Company’s business/ activities/ result/ transactions, etc. clauses (i), (ii), (iii), (iv), (vi), (vii), (viii), (x), (xi), (xii),

(xiii), (xiv), (xv), (xvi), (xvii), (xviii), (xix), and (xx) of CARO are not applicable.(ii) To the best of our knowledge and belief and according to the information and explanations given to us, there were no contracts or

arrangements that needed to be entered in the Register maintained under Section 301 of the Companies Act, 1956.(iii) According to the information and explanations given to us, the Company has been regular in depositing undisputed statutory dues, including

Income-tax and other material statutory dues applicable to it with the appropriate authorities during the period.(iv) To the best of our knowledge and according to the information and explanations given to us, no material fraud by or on the Company has been

noticed or reported during the period.

FOR DELOITTE HASKINS & SELLS LLP

Chartered Accountants(Firm Registration No. 117366W/W-100018)

Z. F. BILLIMORIA

(Partner)(Membership No. 42791)



IN TERMS OF OUR REPORT ATTACHED.

FOR DELOITTE HASKINS AND SELLS LLP

Chartered AccountantsFOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF

IDFC HOUSING FINANCE COMPANY LIMITED

Z. F. BILLIMORIAPartner

VIKRAM LIMAYEDirector

MAHENDRA N. SHAHDirector

Mumbai | April 7, 2014

NOTES

AS AT MARCH 31, 2014

`


`

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

(a) Share capital 3 120,000,000 (b) Reserves and surplus 4 (624,890) 119,375,110

CURRENT LIABILITIES

(a) Trade payables 5 93,146 (b) Other current liabilities 6 9,000 (c) Short-term provisions 7 19,200

TOTAL 119,496,456

ASSETS

NON-CURRENT ASSETS

(a) Deferred tax asset 8 245,201

CURRENT ASSETS

(a) Cash and bank balances 9 118,931,200 (b) Other current assets 10 320,055

TOTAL 119,496,456

See accompanying notes forming part of the financial statements.

Balance Sheet AS AT MARCH 31, 2014


NOTES

MARCH 4, 2014 TO MARCH 31, 2014

`

I INCOME

Other income 11 320,055 TOTAL INCOME (I) 320,055

II EXPENSES

Other expenses 12 1,170,946 TOTAL EXPENSES (II) 1,170,946

III LOSS BEFORE TAX (I - II) (850,891)

IV TAX EXPENSE

Current tax 19,200 Deferred tax (245,201)TOTAL TAX EXPENSES (IV) (226,001)

V LOSS FOR THE YEAR FROM CONTINUING OPERATIONS (III - IV) (624,890)

EARNINGS PER EQUITY SHARE (NOT ANNUALISED) (NOMINAL VALUE OF SHARE ` 10 EACH) 15 Basic (`) (0.11) Diluted (`) (0.11)

See accompanying notes forming part of the financial statements.






VIKRAM LIMAYE Director



Statement of Profit and LossFOR THE PERIOD FROM MARCH 4, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014


MARCH 4, 2014 TO MARCH 31, 2014

A. CASH FLOW FROM OPERATING ACTIVITIES

LOSS BEFORE TAX FOR THE PERIOD (850,891)Adjustment for changes in working capital:Adjustments for increase in operating assets:

Other current assets (320,055)Adjustments for increase in operating liabilities:

Trade payables 93,146 Current liabilities 9,000

NET CASH USED IN OPERATING ACTIVITIES (A) (1,068,800)

B. CASH FLOW FROM INVESTING ACTIVITIES –NET CASH FROM INVESTING ACTIVITIES (B) –

C. CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of Share Capital 120,000,000 NET CASH FROM FINANCING ACTIVITIES (C) 120,000,000Cash and cash equivalents as at the end of the year (see note 9) (A+B+C) 118,931,200






VIKRAM LIMAYE Director



Cash Flow StatementFOR THE PERIOD FROM MARCH 4, 2014

(DATE OF INCORPORATION) TO MARCH 31, 2014


Notes forming part of the Financial Statements AS AT AND FOR THE YEAR ENDED MARCH 31, 2014

01 BackgroundIDFC Housing Finance Company Limited ('the Company') is a public company, incorporated in India on March 4, 2014. The Company is a wholly owned subsidiary of IDFC Limited. The Company has applied for certificate of registration to National Housing Board ("NHB") on March 21, 2014 for commencing the business of Housing Finance.

02 Significant accounting policies (a) Basis of preparationThe financial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles in India ("Indian GAAP") to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ("the 1956 Act") (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ("the 2013 Act") in terms of General Circular 15/ 2013 dated September 13, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on the accrual basis under the historical cost convention.

(b) Use of estimatesThe preparation of the financial statements in conformity with Indian GAAP requires the management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements and the reported income and expenses during the reporting period. The management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates and the difference between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

(c) Revenue recognitionInterest income on bank deposits is recognised on accrual basis.

(d) Taxes on income"Income tax expense comprises of current income tax and deferred tax. Current tax is the amount payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961. The accounting treatment for income-tax in respect of the Company's income is based on Accounting Standard 22 on 'Accounting for Taxes on Income' as notified under the Companies (Accounting Standards) Rules, 2006. The provision made for income-tax in the accounts comprises both, the current tax and the deferred tax. The deferred tax assets and liabilities for the year arising on account of timing differences are recognised in the Statement of Profit and Loss and the cumulative effect thereof is reflected in the Balance Sheet."Deferred tax is measured based on the tax rates and the tax laws enacted or substantively enacted at the reporting date. Deferred tax assets are recognised only to the extent that there is reasonable certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In situations where the Company has unabsorbed depreciation or carried forward losses, deferred tax assets are recognised only if there is virtual certainty supported by convincing evidence that the same can be realised against future taxable profits.

(e) Cash and cash equivalentsCash and cash equivalents for the purpose of the Cash Flow Statement comprises cash on hand, cash in bank, fixed deposits and other short-term highly liquid investments with an original maturity of three months or less that are readily convertible into known amount of cash and which are subject to an insignificant risk of change in value.

(f) Cash flow statementCash flows are reported using the indirect method, whereby profit / (loss) before tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

(g) Earnings per shareBasic earnings per share is computed by dividing the profit / (loss) after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax as adjusted for expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

(h) Provisions and contingenciesA provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities if any, are disclosed in the notes. Contingent assets are not recognized in the financial statement.



03 Share capital AS AT MARCH 31, 2014

NUMBER `

AUTHORISED SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 ISSUED, SUBSCRIBED & FULLY PAID-UP SHARES

Equity shares of ` 10 each 12,000,000 120,000,000 (All of above shares are held by IDFC Limited, the Holding Company and its nominees)TOTAL ISSUED, SUBSCRIBED & FULLY PAID-UP SHARE CAPITAL 120,000,000

(a) Reconciliation of the number of equity shares outstanding at the beginning and at the end of the year.


NUMBER `

Outstanding at the beginning of the year – –Issued during the year 12,000,000 120,000,000 Outstanding at the end of the year 12,000,000 120,000,000

(b) Terms / rights attached to equity shares n The Company has only one class of equity shares having a par value of ` 10 per share. Each holder of equity shares is entitled to one vote

per share. n In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the

Company, after distribution of all preferential amounts. However, no such preferential amounts exists currently. The distribution will be in proportion to the number of equity shares held by the shareholders.

(c) Details of shareholders holding more than 5% of the shares in the Company

Equity shares AS AT MARCH 31, 2014

NUMBER % OF HOLDING

IDFC Limited and its nominees 12,000,000 100%

04 Reserves and surplus AS AT MARCH 31, 2014

`

(A) DEFICIT IN THE STATEMENT OF PROFIT AND LOSS

Opening balance –Loss for the period (624,890)Closing balance (624,890)

05 Trade payables AS AT MARCH 31, 2014

`

Trade payables 41,966 Provision for expenses 51,180 TOTAL 93,146

No amount is payable to “Suppliers” under Micro, Small and Medium Enterprises Development Act, 2006. No interest has been paid / is payable by the Company during the year to the “Suppliers” covered under the Micro, Small and Medium Enterprises Development Act, 2006. The above information takes into account only those suppliers who have responded to inquiries made by the Company for this purpose.



06 Other current liabilties AS AT MARCH 31, 2014

`

Statutory liabilities 9,000 TOTAL 9,000

07 Short-term provisions AS AT MARCH 31, 2014

`

Provision for tax 19,200 TOTAL 19,200

08 Deferred tax asset AS AT MARCH 31, 2014

`

Preliminary expenses 245,201 TOTAL 245,201

09 Cash and bank balances AS AT MARCH 31, 2014

`

CASH AND CASH EQUIVALENTS

Balance with bank:in current account 931,200in deposit account 118,000,000

TOTAL 118,931,200

10 Other current assets AS AT MARCH 31, 2014

`

Interest accrued on bank deposit 320,055 TOTAL 320,055

11 Other incomeMARCH 4, 2014

TO MARCH 31, 2014`

Interest on bank deposit 320,055 TOTAL 320,055



12 Other expensesMARCH 4, 2014 TO

MARCH 31, 2014`

Preliminary expenses written off 991,913 Stamp duty 119,500 Auditors’ remuneration * 56,180 Miscellaneous expenses 3,353 TOTAL 1,170,946

* Breakup of Auditor’s remuneration Audit fee 50,000 Service tax 6,180

56,180

13 The Company is yet to commence its commercial operations. Accordingly, there are no separate reportable segments as per Accounting Standard 17 on ‘Segment Reporting’ as notified under the Companies (Accounting Standards) Rules, 2006.

14 As per Accounting Standard 18 on ‘Related Party Disclosures’ as notified under the Companies (Accounting Standards) Rules, 2006, the related parties of the Company are as follows:

Relationship:I. Holding company: IDFC Limited

The nature and volume of transactions carried out with the above related party in the ordinary course of business is as follows:

NAME OF RELATED PARTY AND NATURE OF RELATIONSHIP

PARTICULARS MARCH 31, 2014`

Holding companyIDFC Limited Proceeds from issue of equity shares 119,999,940

15 In accordance with Accounting Standard 20 on ‘Earnings Per Share’ as notified under the Companies (Accounting Standards) Rules, 2006:The earnings per share have been computed as under:

PARTICULARS CURRENT PERIOD

Loss after tax (`) (624,890)Weighted average number of equity shares (Nos.) 5,598,214 Basic & diluted earnings per share (`) (0.11)Nominal value per share (`) 10

16 Since the Company was incorporated on March 4, 2014 this is the first accounting year of the Company. Accordingly there are no comparative figures.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF


Mumbai | April 7, 2014VIKRAM LIMAYEDirector


17 idfc housing finance company limited · idfc housing finance company limited | 289 in terms of...

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