Notes to Accounts of Star Housing Finance Ltd.

Mar 31, 2018

1. SHARE CAPITAL

1.1 The company has, at present, one class of issued, subscribed and paid up share referred to as equity share having a par value of Rs 10/- each. Each holder of equity share is entitled to one vote per share.

1.2 Company has increased its Authorised Share Capital Rs. 12 Crore to Rs.14 Crore during the year .

1.3 Reconciliation of the number of shares outstanding and the amount of share capital as at the beginning and at the end of the reporting period :

2. Reserves& Surplus

2.1 The Company has transferred a sum of Rs. 80.00 lacs (Rs. 42.08 lacs) during the year in the Special Reserve out of its profits in terms of Section 29C of the National Housing Bank Act, 1987. This amount includes the transfer of a sum of Rs.29.22 lacs (Rs.15.72 lacs) in the reserve created under Section 36(1) (viii) of the Income Tax Act, 1961. Breakups of transfer of funds in both the reserves are as under:-

3. Short Term provisions- Provision for Taxation includes Rs. 106.97 lacs (Rs. 67.25 lacs) as Tax provision for current year.

4. Housing Finance

4.1 As certified by the management, loans given by the company are secured by Equitable Mortgage/Registered Mortgage of the property and assets financed and/or assignment of Life Insurance Policies and /or personal Guarantees and are considered appropriate and good.

4.2 The Non-Performing Assets (NPA) as on March 31st 2018, consisting of principal loans outstanding where payments of EMI were in arrears for 90 days or more amounted to Rs. 59,54,494/- (Rs. 31,68,475/-). As per prudential norms prescribed by the NHB, the company is required to carry a contingency provision of Rs. 36,80,128/- (Rs. 21,43,994/-) in respect of Standard and Non Performing Housing loans assets. The company has made during the year, Provision of Rs. 15,36,134/- (Rs. 7,12,484/-) thereby total provisioning of Rs 36,80,128/- (Rs. 21,43,994/-) for contingencies against the requirement of Rs. 36,80,128/- of total provision. Company has sufficient provision as per the requirements of the guidelines on prudential norms issued by the National Housing Bank (NHB).

5.1 The Company has not written off any loan amount during the year ended 31.03.2018.

5.2 In terms of the requirement of the National Housing Bank (NHB) Directions 2010, further amended vide Circular no. NHB.HFC.Dir.3/CMD/2011 dtd August 5th 2011, the company has met the said requirements as under by providing Provisions for contingencies @ 0.25% on all standard assets in respect of all loans.

6. As per Accounting standard (AS-20) "Earnings per Share" is calculated for the Year as on 31.03.2018 is Rs. 2.43. EPS for the previous year as on 31.03.2017 was Rs.1.19.

d. The Company has given new loans during the year to parties who categories under the Related Parties as Normal Business of financing Transactions. As these transactions were done as normal business transactions, these have not been reported as per the disclosure under Related Party Transactions.

7. The main business of the company is to provide loans for the purchase or construction of residential houses and all other activities of the company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on "Segment Reporting", and under paragraph 29(2) of the Housing Finance Companies (NHB) Directions, 2010, which needs to be reported.

IV. During the year, Company has not entered into any (a) derivative transaction, (b) securitisation and assignment transaction, (c) financing of Parent Company product, and (e) finance of any unsecured advances against intangible securities such as rights, licenses, authority etc as collateral security.

V. The Company has not exceeded limit prescribed by National Housing Bank for Single Borrower Limit (SGL) and Group Borrower Limit (GBL).

VI. The Company has not obtained registration from any other financial sector regulator.

VII. During the year, a) no prior period items occurred which has impact on profit and loss account, b) no change in any accounting policy, c) there were no circumstances in which revenue recognition has been postponed pending the resolution of significant uncertainties, d) there is no withdrawal from Reserve fund, e) Company has not accepted public deposits, f) Company does not consists of any Overseas Assets and g) Company does not consists Off balance Sheet SPVs sponsored (which are required to be consolidated as per accounting Norms).

VIII. The Company has no subsidiary company. Hence, requirement of consolidated financial statements is not applicable to the company.

8. NHB, has not levied any penalty under HFC (NHB) Directions, 2010 on the company.

9. Provident Fund and ESIC.

In the current year, the company has paid all the statutory dues as per relevant law.

10. Investments in shares of Other companies:

11. There are no Micro, Small and Medium Enterprises (MSME) to whom the Company owes dues, which are outstanding for more than 45 days as at 31-03-2018. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis at information available with the Company.

12. Figures of the previous year have been regrouped, rearranged and reclassified wherever necessary.

13. Figures in brackets represent previous full year''s figures i.e figures for Financial Year 2016-17.

14. Credit assigned by Credit Rating Agencies and Migration of Rating during the year.

---

Mar 31, 2017

1. Short Term provisions- Provision for Taxation includes Rs. 67.25 lacs (Rs. 52.25 lacs) as Tax provision for current year.

2. Housing Finance

3. As certified by the management, loans given by the company are secured by Equitable Mortgage/Registered Mortgage of the property and assets financed and/or assignment of Life Insurance Policies and /or personal Guarantees and are considered appropriate and good.

4. The Non-Performing Assets (NPA) as on March 31st 2017, consisting of principal loans outstanding where payments of EMI were in arrears for 90 days or more amounted to Rs. 31,68,475/- (Rs. 32,38,629/-). As per prudential norms prescribed by the NHB, the company is required to carry a contingency provision of Rs. 21,43,994/- (Rs. 14,31,510/-) in respect of Standard and Non Performing Housing loans assets. The company has made during the year, Provision of Rs. 7,12,484/- (Rs. 2,38,570/-) thereby total provisioning of Rs 21,43,994/ - (Rs. 14,31,510/-) for contingencies against the requirement of Rs. 21,43,994/- of total provision. Company has sufficient provision as per the requirements of the guidelines on prudential norms issued by the National Housing Bank (NHB).

5. The Company has written off 1 loans during the year ended 31.03.2017 amounting to Rs 32,809/-. The figure for the loans written off during the FY 2015-16 was Rs. 10,43,225/-.

6. In terms of the requirement of the National Housing Bank (NHB) Directions 2010, further amended vide Circular no. NHB.HFC.Dir.3/CMD/2011 dtd August 5th 2011, the company has met the said requirements as under by providing Provisions for contingencies @ 0.40% on all standard assets in respect of all loans.

7. As per Accounting standard (AS-20) “Earnings per Share” is calculated for the Year as on 31.03.2017is Rs. 1.19. EPS for the previous year as on 31.03.2016 was Rs.0.97. As per AS 20 EPS for the year 2015-16 has been restated on the basis of bonus shares issued during the year.

8. As per Accounting standard (AS-18) on “Related Party Disclosures” details of transactions with related parties as defined therein are as given below:

9. List of related parties with whom transactions have taken place during the year and their nature of relationship is as follows:

Key Managerial personals :

10. Nirmal Jain

11. Dr. M.L. Nagda

Relative of Key Managerial Personals :

12. Manju Devi Jain (Wife of Director- Nirmal Kumar Jain)

13. Ashish Jain (Son of Director- Mohan Lal Nagda)

14. The Company has given new loans during the year to parties who categories under the Related Parties as Normal Business of financing Transactions. As these transactions were done as normal business transactions, these have not been reported as per the disclosure under Related Party Transactions.

15. The main business of the company is to provide loans for the purchase or construction of residential houses and all other activities of the company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on “Segment Reporting”, and under paragraph 29(2) of the Housing Finance Companies (NHB) Directions, 2010, which needs to be reported.

16-For the purposes of this clause, the term ‘Specified Bank Notes'' shall have the same meaning provided in the notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E), dated the 8th November, 2016.

17. Figures of the previous year have been regrouped, rearranged and reclassified wherever necessary.

18. Figures in brackets represent previous full year''s figures i.e. figures for Financial Year 2015-16.

---

Mar 31, 2016

1. SHARE CAPITAL :

2 The company has, at present, one class of issued, subscribed and paid up share referred to as equity share having a par value of Rs 10/- each. Each holder of equity share is entitled to one vote per share.

3 Company has not increased/ decreased its Authorized Share Capital during the year.

4. Reconciliation of the number of shares outstanding and the amount of share capital as at the beginning and at the end of the reporting period:

5.Reserves& Surplus

6. The Company has transferred a sum of Rs. 33.78lacs (Rs. 19.60lacs) during the year in the Special Reserve out of its profits in terms of Section 29C of the National Housing Bank Act, 1987. This amount includes the transfer of a sum of Rs. 6.93lacs(Rs. 4.44lacs) in the reserve created under Section 36(1) (viii) of the Income Tax Act, 1961. Breakup of transfer of funds in both the reserves are as under:-

7. Short Term provisions- Provision for Taxation includes Rs. 52.25lacs (Rs. 30.45 lacs) as Tax provision for current year.

8. Housing Finance

9. As certified by the management, loans given by the company are secured by Equitable Mortgage/Registered Mortgage of the property and assets financed and/or assignment of Life Insurance Policies and /or personal Guarantees and are considered appropriate and good.

10. The Non-Performing Assets (NPA) as on March 31st 2016, consisting of principal loans outstanding where payments of EMI were in arrears for 90 days or more amounted to Rs. 32,38,629/- (Rs. 25,74,873/-). As per prudential norms prescribed by the NHB, the company is required to carry a contingency provision of Rs. 14,31,510/- (Rs. 11,92,940/ -) in respect of Standard and Non Performing Housing loans assets. The company has made during the year, Provision of Rs. 2,38,570/- (Rs. 5,29,027/-) thereby total provisioning of Rs14,31,510/-( Rs 11,92,940/-) for contingencies against the requirement of Rs. 14,31,510/- of total provision. Company has sufficient provision as per the requirements of the guidelines on prudential norms issued by the National Housing Bank (NHB).

11. The amount of outstanding Loans provision made by the company as per the guidelines by the NHB-

12. Details of the Company Outstanding Loans and provisions thereon as on 31.03.2016 are as under:

A) As per Paragraph 28 of NHB directions 2010-

Provision for Standard/ Sub Standard/ Doubtful and Loss Assets as per NHB Directions (paragraph 28)as on 31-03-2016

13 The Company has written off 6 loans during the year ended 31.03.2016 amounting to Rs 10,43,225/-. The figure for the loans written off during the FY 2014-15 was Rs. 4,79,515/-.

14 In terms of the requirement of the National Housing Bank (NHB) Directions 2010, further amended vide Circular no. NHB.HFC.Dir.3/CMD/2011 dtd August 5th 2011, the company has met the said requirements as under by providing Provisions for contingencies @ 0.40% on all standard assets in respect of all loans.

15. As per Accounting standard (AS-20) “Earnings per Share” is calculated for the Year as on 31.03.2016 is Rs. 1.95. EPS for the previous year as on 31.03.2015 was Rs.1.52.

16. As per Accounting standard (AS-18) on “Related Party Disclosures” details of transactions with related parties as defined therein are as given below:

17. List of related parties with whom transactions have taken place during the year and their nature of relationship is as follows :

Key Managerial personals :

a. Nirmal Jain

b. Dr.M.L.Nagda

Relative of Key Managerial Personals :

a. Manju Devi Jain (Wife of Director- Nirmal Kumar Jain)

b. Ashish Jain ( Son of Director- Mohan Lal Nagda)

18. The Company has given new loans during the yearto parties who categories under the Related Parties as Normal Business of financing Transactions. As these transactions were done as normal business transactions, these have not been reported as per the disclosure under Related Party Transactions.

19. The main business of the company is to provide loans for the purchase or construction of residential houses and all other activities of the company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on “Segment Reporting”, and under paragraph 29(2) of the Housing Finance Companies (NHB) Directions, 2010, which needs to be reported.

20. As required by the guidelines of NHB, the following additional Disclosures are as follows:

21. NHB, has not levied any penalty under HFC (NHB) Directions, 2010 on the company.

22. In the Current year the company has paid advance amount of Rs. 4.00 lacs for the acquisition of land and office building. So the total Amount outstanding under Advance against property is of Rs72.00 lacs and is being carried forward.

23. Provident Fund and ESIC.

In the current year, the company has taken registration under the relevant act, and company has paid all the statutory dues on due date.

24. There are no Micro, Small and Medium Enterprises (MSME) to whom the Company owes dues, which are outstanding for more than 45 days as at 31-03-2016. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis at information available with the Company.

25. Figures of the previous year have been regrouped, rearranged and reclassified wherever necessary.

26. Figures in brackets represent previous full year’s figures i.e figures for Financial Year 2014-15.

---

Mar 31, 2015

1. SHARE CAPITAL

1.1 The company has, at present, one class of issued, subscribed and paid up share referred to as equity share having a par value of Rs 10/- each. Each holder of equity share is entitled to one vote per share.

1.2 Company has increased its Authorised Share Capital from Rs. 300.00lacs to Rs. 600.00lacs.

1.3 2167250 Equity shares of Rs 10/- have been allotted as fully paid Bonus Shares during the period by utilising its Share Premium Reserve.

1.4 Further the company has made an IPO of 1600000 shares of Rs 10/- each. The Equity Shares have been priced and allotted at Rs 30/-per equity share (Including share premium of Rs 20/- per Equity share).

1.5 The Company has raised Rs 480.00 lacs out of the IPO. The Equity share offers to the public have been allotted on 20th march 2015 and have been listed on Bombay Stock Exchange (BSE).

1.6 Accordingly, on account of above, Issued, Subscribed and Paid up Capital of the Company has been increased to Rs. 593.45lacs from Rs. 216.725lacs and an amount of Rs. 298.66lacs (Net of Share issue expense of Rs 21.34 lacs) has been credited to share premium account. The proceeds of the issue (net of issue expenses) are being utilized for the purpose mentioned in the prospectus/retained in Bank Deposit pending utilization.

1.7 Reconciliation of the number of shares outstanding and the amount of share capital as at the beginning and at the end of the reporting period:

2. Reserves & Surplus

2.1 The Company has transferred a sum of Rs. 19.60lacs (Rs. 10.71lacs) during the year in the Special Reserve out of its profits in terms of Section 29C of the National Housing Bank Act, 1987. This amount includes the transfer of a sum of Rs. 4.44 lacs (Rs. 3.21lacs) in the reserve created under Section 36(1) (viii) of the Income Tax Act, 1961. Breakup of transfer of funds in both the reserves are as under:-

2.2 Company has utilised total amount of Rs. 23808397/- from Share premium account for the allotment of 21, 67,250 shares of Rs 10/- each as bonus shares and Rs 2135897/- for share issue expense.

3. Short Term provisions- Provision for Taxation includes Rs. 30.45lacs (Rs. 16.87lacs) as Tax provision for current year.

4. Housing Finance

4.1 As certified by the management, loans given by the company are secured by Equitable Mortgage/Registered Mortgage of the property and assets financed and/or assignment of Life Insurance Policies and /or personal Guarantees and are considered appropriate and good.

4.2 The Non-Performing Assets (NPA) as on March 31st 2015, consisting of principal loans outstanding where payments of EMI were in arrears for 90 days or more amounted to Rs. 25,74,873/- (Rs. 19,40,375/-). As per prudential norms prescribed by the NHB, the company is required to carry a contingency provision of Rs. 11, 92,940/- (Rs. 6, 63,913/-) in respect of Standard and Non Performing Housing loans assets. The company has made during the year, Provision of Rs. 5,29,027/- (Rs. 4,06,399/-) thereby total provisioning of Rs. 11,92,940/-( Rs6,63,913/-) for contingencies against the requirement of Rs. 11,92,940/- of total provision. Company has sufficient provision as per the requirements of the guidelines on prudential norms issued by the National Housing Bank (NHB).

5. The amount of outstanding Loans provision made by the company as per the guidelines by the NHB-

5.1 Details of the Company Outstanding Loans and provisions thereon as on 31.03.2015 are as under:

As per Paragraph 28 of NHB directions 2010-

5.2 The Company has written off 2loans during the year ended 31.03.2015 amounting to Rs 479515/-. The figure for the loans written off during the FY 2013-14 was Rs. 3,95,567/-.

5.3 In terms of the requirement of the National Housing Bank (NHB) Directions 2010, further amended vide Circular no. NHB.HFC.Dir.3/CMD/2011 dated August 5th 2011, the company has met the said requirements as under by providing Provisions for contingencies @ 0.40% on all standard assets in respect of all loans.

6. As per Accounting standard (AS-20) "Earnings per Share" is calculated after adjusting Bonus Equity Shares

Allotted on 10/09/2014 and shares allotted in IPO on 20.03.2015. EPS for the Year as on 31.03.2015 is Rs.1.52. EPS for the previous year as on 31.03.2014 was Rs.2.11. EPS is re-calculated after adjusting the effect of allotment of bonus equity shares, with retrospective effect, for the Previous Financial Year i.e.2013-14 which comes to Rs. 0.94

7. As per Accounting standard (AS-18) on "Related Party Disclosures" details of transactions with related parties as defined therein are as given below:

7.1 List of related parties with whom transactions have taken place during the year and their nature of relationship is as follows:

Key Management personals

a. Nirmal Jain

b. Dr. M.L. Nagda

Relative of Key Management Personals-

a. Manju Devi Jain (Wife of Director- Nirmal Kumar Jain)

7.2 Transactions by Company during the year with related parties (Rs in lacs)

7.3 The Company has given new loan during the year amounting to Rs 287.00lacsto parties who categories under the Related Parties as Norma Business of financing Transactions. The total outstanding balance as on at the end of the year was of Rs 229.04lacs. As these transactions were done as normal business transactions, these have not been reported as per the disclosure under Related Part Transactions.

8. The main business of the company is to provide loans for the purchase or construction of residential houses and all other activities of the company revolve around the main business and as such there are no separate reportable segments as specified in Accounting Standard (AS-17) on "Segment Reporting", and under paragraph 29(2) of the Housing Finance Companies (NHB) Directions, 2010, which needs to be reported.

9. NHB has not levied any penalty under HFC (NHB) Directions, 2010 on the company.

10. In the Current year the company has additionally paid Rs 5.00 lacs as advance for acquisition of office building. So the total Amount outstanding is of Rs 68.00 lacs and is being carried forward.

11. Provident Fund and ESIC Since the no. of employees are below the prescribed limit of 20 or more as specified in the relevant act, therefore it does not come under the ambit of following the provisions of PF and ESIC.

12. Investments in shares of Other companies:

In earlier years no future tax consequences on account of timing difference was considered on the Provision of Contingency and Amount Transferred in Special reserve created u/s 36(1)(viii) of the Income Tax Act. Therefore, it has been accounted for all the previous financial years along with the Current financial year.

13. There are no Micro, Small and Medium Enterprises (MSME) to whom the Company owes dues, which are outstanding for more than 45 days as at 31-03-2015. This information as required to be disclosed under the Micro, Small and Medium Enterprises Development Act, 2006 has been determined to the extent such parties have been identified on the basis at information available with the Company.

14. Figures of the previous year have been regrouped, rearranged and reclassified wherever necessary.

15. Figures in brackets represent previous full year's figures i.e. figures for Financial Year 2013-14.