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Accounting Policies of Dewan Housing Finance Corporation Ltd. Company

Mar 31, 2015

1.1 Basis of preparation of financial statements :

a) The financial statements have been prepared under the historical cost convention on accrual basis, except pertaining to amalgamation accounting in the earlier years, in accordance with the generally accepted accounting principles, provisions of the Companies Act, 2013, Housing Finance Companies, (NHB) Directions, 2010, The National Housing Bank Act 1987 and Accounting Standards (AS) notified u/s 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

b) The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statement are prudent and reasonable. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

c) Based on the nature of its activities, the Company has determined its operating cycle as 12 months for the purpose of classification of its Assets and Liabilities as current and non current.

d) Amounts in the financial statements are presented in Rs. lakh, except for per share data and as otherwise stated. All exact amounts are stated with suffix "/-".

2.2 Revenue Recognition

a) Interest on housing loans :

Repayment of housing loans is by way of Equated Monthly Installments (EMI), comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company''s financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI monthly interest is payable.

Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b) Dividend income on investments is recognised when the right to receive the same is established.

c) Processing fees and penal interest income on delayed EMI/PEMI are recognised on receipt basis.

d) Income from services and interest bearing investment is recognised on accrual basis.

2.3 Interest & Other related Financial Charges :

Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and other related financial charges are recognized as an expense in the period for which they relate as specified in Accounting Standard (AS 16) on "Borrowing Costs".

2.4 Foreign exchange transactions :

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rates prevailing on the date of the Balance Sheet, except those covered by forward contract, currency swap contracts. Any gain or losses on account of exchange differences either on settlement or on translation are recognized in the Statement of Profit and Loss.

In respect of Forward Exchange Contracts the premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts on reporting dates are recognized in the Statement of Profit and Loss. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as an expense in that year.

2.5 Provision for Contingencies :

Provision for Contingencies has been made for diminution in investment value and on standard as well as on non- performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company also makes certain additional provision to meet unforeseen contingencies.

2.6 Investments :

In accordance with Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank, Investments are either classified as current or long term based on management''s intention at the time of purchase. On initial recognition, all investments are measured at cost. The cost comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and stamp duty.

Long term investments are carried at cost less provision for diminution, other than temporary, in the value of investments. Current investments are stated at lower of cost and fair value.

2.7 Tangible Fixed Assets :

Fixed Assets are stated at cost less accumulated depreciation and impaired losses, if any. All directly attributable costs including borrowing cost, net of cenvat credit, till the asset is put to use is shown as capital work in progress and is capitalised thereafter. Depreciation on fixed assets is provided on straight-line method by considering revised useful lives as specified in part ''C'' of schedule II to the Companies Act, 2013.

2.8 Intangible Assets :

Intangible assets including software are capitalized where it is expected to provide future enduring economic benefits. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets are amortised over the estimated useful life of the asset.

2.9 Impairment of Assets :

An asset is treated as impaired when it is unusable and the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired.

2.10 Leases:

Operating Leases

Lease rentals in respect of assets taken on "Operating Leases" are charged to the Statement of Profit and Loss on straight line basis over the lease term.

Finance Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease and are accordingly disclosed. The capital element of the leasing commitments is shown as Secured liabilities. Lease payments are apportioned between the finance charges and reduction of the corresponding liability based on the implicit rate of return.

2.11 Statutory / Special Reserve :

The Company creates Statutory / Special Reserve every year out of its profits in terms of Sec 36(1) (viii) of the Income Tax Act, 1961 read with Sec 29C of the National Housing Bank Act, 1987.

2.12 prepaid Expenses :

Financial & Other Expenses incurred during the year which provide benefit in several accounting years and brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to the current year and balance is treated as prepaid expenses to be adjusted on pro-rata time basis in the future accounting years.

2.13 employees Retirement Benefits :

a) Company''s contribution in respect of Employees'' Provident Fund is made to Government Provident Fund and is charged to the Statement of Profit & Loss.

b) Gratuity Fund Scheme is considered as defined benefit plans. The Company''s liability is determined on the basis of an actuarial valuation using the projected credit unit method as at Balance Sheet date. Actuarial Gains / Losses are recognized immediately in the Statement of Profit & Loss in the year on which they arise.

c) Leave Encashment are accounted for on actuarial valuation at the year end using the projected credit unit method. Actuarial Gains / Losses are recognized immediately in the Statement of Profit & Loss in the year on which they arise.

2.14 Earnings per share :

The Basic earning per share and diluted earning per share have been computed in accordance with Accounting Standard (AS-20) on, "Earnings Per Share" and is also shown in the Statement of Profit and Loss.

2.15 Accounting for Taxes :

Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS-22) on "Accounting for Taxes on Income". The Deferred tax assets and liabilities for the year, arising out of timing difference, are reflected in the Statement of Profit and Loss. The cumulative effect thereof is shown in the Balance Sheet. The Deferred Tax Assets, if any, are recognised only to the extent that there is reasonable certainty that the assets will be realized in future. However if there are carried forward loss / depreciation then the deffered tax if any, are recognised only to the extent that there is virtual certainty that the assets will be realized in future.

Deferred Tax liability on deduction claimed in earlier years u/s 36 (1)(viii) of the Income Tax Act, 1961 has been provided in terms of National Housing Bank (NHB) policy circular.

2.16 provisions, Contingent Liability and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

2.17 Housing and Other Loans :

Housing Loans include outstanding amount of Housing Loans disbursed directly or indirectly to individual, project loans for residential buildings and other borrowers. Other loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not began in last three years and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). Other loans also include loans granted to Small & Medium Enterprise (SME) and certain part are unsecured in terms of the particular scheme. EMI and installments due from borrowers against the housing loans receivable for less than three months, are treated as trade receivables and are shown as current assets.

2.18 Securitised Assets :

Securitised and Assigned Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of such assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.

3.1 The Company has, at present, one class of issued, subscribed and paid up share referred to as equity shares having a par value of Rs. 10/- each. Each holder of equity share is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

3.4 During the year the Company has offered and allotted 1,69,31,102 no of Equity Shares of face value of Rs. 10 each at premium of Rs. 468.18 per share for aggregate amount of Rs. 79,268 lakh to 53 Qualified Institutional Investors by way of Qualified Institutional Placement (QIP). The proceeds of the QIP have been utilised as per the QIP document.

3.5 Company has allotted 1,08,86,375 no. of equity shares as fully paid up for consideration other than cash as per the Scheme of Amalgamation during the financial year 2012 - 13.

3.6 Employee Stock Option Plans:

a. Employee Stock Option Scheme 2008 (ESOS-2008) was implemented by the Company. 14,22,590 equity share options were granted under ''ESOS-2008'' in 2008-09 to the employees as approved by the remuneration and compensation committee of directors of the Company at Rs. 53.65 per share, the reconsidered price approved in the EOGM dated March 31, 2009.

During the year, the Company has allotted, from time to time, 49,612 (81,458) number of equity shares of Rs. 10/- each to various eligible employees under ''ESOS 2008'' at the price of Rs. 53.65 per equity share (including a premium of Rs. 43.65 per equity share) aggregating to Rs. 5 lakh (Rs. 8 lakh) as approved in the AGM dated July 23, 2007 and allotted at the reconsidered price approved in the EOGM dated March 31,2009.

b. Employee Stock Option Scheme 2009 (ESOS-2009) was implemented by the Company. 12,75,000 equity share options were granted under ''ESOS-2009, Plan I'' in 2009-10 and additional 12,34,670 equity share options were approved to be granted under ''ESOS-2009, Plan II'' in 2010-11 to the employees by the remuneration and compensation committee of directors of the Company at Rs. 141/- per share, the price approved in the remuneration and compensation committee meeting held on November 25, 2009.

During the year, the Company has allotted, from time to time, 275,788 (120,073) number of equity shares of Rs. 10/- each to various eligible employees under ''ESOS 2009'' at the price of Rs.141/- per equity share (including a premium of Rs. 131/- per equity share) aggregating to Rs. 28 lakh (Rs. 12 lakh) as approved in the AGM dated July 23, 2007.

c. During the year, the Company has approved the grant of 15,50,100 (Fifteen lakh, Fifty Thousand And One Hundred) Employee Stock Appreciation Rights (SARs) to the eligible employees of the Company, in terms of Dewan Housing Finance Corporation Limited-Employee Stock Appreciation Rights Plan 2015 ("DHFL ESAR 2015"). The said SARs shall vested over a period of five years and to be exercised within three years from the date of vesting of SARs and carry the right to apply for number of equity shares of the Company of face value of Rs.10/- each, equivalent to appreciation in those rights, over the grant price i.e. SAR price of Rs. 380/- per SAR.

4.1 During the year, the Company has paid an interim dividend on equity shares @ Rs. 4/-(Rs. 3/-) per share. The Board of Directors, has recommended final dividend to be paid out of current year profits @ Rs. 2/- (Rs. 2/-) per equity share to the equity shareholders. In the previous year Company had also given a Special 30th Anniversary celebration dividend @ Rs. 3/- per equity share.

4.2 In accordance with Section 52 of the Companies Act, 2013, during the year the Company has utilized Securities Premium Account towards share issue expenses, amortization of securities issue expenses and premium on redemption of Zero Coupon Secured Redeemable Non-Convertible Debentures amounting to Rs. 19,127 lakh (Rs. 3,471 lakh), net of tax of Rs. 7,934 lakh (Rs. 773 lakh).

4.3 Statement for Disclosure on Statutory / Special Reserves, as prescribed by NHB vide its circular no NHB(ND)/DRS/Pol. Circular.61/2013-14, dated: April 7, 2014.

4.4 National Housing Bank vide circular No.NHB(ND)/DRS/Policy Circular 65/2014-15 dated August 22, 2014 has clarified that deferred tax liability (contingent upon Company''s withdrawal of 36(1)(viii) Reserves leading to tax liability) in respect of opening balance under special reserve as at April 1,2014 may be adjusted from free opening reserves of the Company over a period of 3 years in the ratio of 25:25:50 respectively. Accordingly, the Company has proportionately adjusted its opening reserves as at April 1,2014 with an amount of Rs. 4,162 lakh as contingent deferred tax liability and unamortised amount against the same is Rs. 12,489 lakh. Deferred Tax Liability on current year Special Reserve has been appropriated to Profit & Loss Account amounting to Rs. 4,726 lakh.

4.5 Utilisation on Depreciation from General Reserve, represents net book value of the Fixed Assets, whose remaining useful life is nil before April 1,2014 as per schedule II of the Companies Act, 2013.

5.1 Non Convertible Debentures (NCD) (current and non current portion) amounting to Rs. 881,736 ( Rs. 490,889) are secured by way of first charge read with Note 5.2 herein below and are redeemable at par, in one or more instalments, on various periods, as below.

Secured NCDs also include amount outstanding for Zero Coupon Secured Redeemable Non-Convertible Debentures (ZCD) aggregating to Rs. 311,897 lakh (Rs. 29,862 lakh), which are redeemable at premium on maturity. The accumulated premium payable on outstanding ZCD accrued till March 31,2015 amounting to Rs. 25,677 lakh (Rs. 2,662 lakh) is included above and has been provided out of the Securities Premium Account (refer Note 4.2).

5.2 All Secured loans (Current and Non Current portion) from the National Housing Bank, Other Banks, Foreign Financial Institution, Financial Institutions and Secured Non Convertible Debentures / ZCB are secured by way of first charge to and in favor of participating banks, Institutions, National Housing Bank and Debenture Trustees jointly ranking pari passu (read with Note 9.1), inter-se, on the Company''s whole of the present and future book debts, housing loan Installments/ receivables, investments including all the receivables of the Company and other movable assets, wherever situated, excluding SLR assets, read with Note 5.3 & 5.4 hereinafter. They are further secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties of the Company to Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture Trustees and are also guaranteed by the promoter directors of the Company.

5.3 During the year Company has availed ECB of USD 125 millions from Asian Development Bank (ADB) and USD 50 millions from Deutsche Investitions U. E. aggregating to USD 175 millions for a period of 7 and 8 years respectively. The principal amount has been hedged by way of currency swaps to protect the foreign currency risk and converted into rupee liability of Rs. 78,425 lakh and Rs. 31,134 lakh respectively, in compliance of statutory requirement.

In the previous year Company had availed ECB of USD 70 millions from IFC Washington for a period of 8 years. The principal amount has been hedged by way of currency swaps to protect the foreign currency risk and converted into rupee liability of Rs. 41,825 lakh. Further Interest rate swap has been undertaking on to hedge the Interest rate risk on the said foreign currency borrowing.

5.4 The National Housing Bank directives require all HFC''s accepting public deposits to create a floating charge on the statutory liquid assets maintained in favor of depositors through the mechanism of a trust deed. The Company has accordingly appointed a SEBI approved trustee Company as trustee for the above by executing the trust deed.

5.5 Unsecured Redeemable Non Convertible Subordinated Debentures aggregating to Rs. 119,150 lakh (Rs. 119,150 lakh), outstanding as at March 31, 2015, are subordinated to present and future senior indebtedness of the Company. It qualifies as Tier II capital in accordance with National Housing Bank (NHB) guidelines for assessing capital adequacy based on balance term to maturity. These debentures are redeemable at par on maturity on various periods read with note no. 5.1

5.6 Fixed Deposits and Other Deposits, including short term fixed deposits and short term other deposits, are repayable as per individual contracted maturities ranging from 12 to 120 months from the date of deposit. The interest is payable on contracted terms depending upon the scheme opted by the depositor.

5.7 Department of Company Affairs with reference to the General Circular no. 4/2003 dated 16.01.2003, has clarified that, Housing Finance Companies registered with National Housing Bank are exempted from the requirement of creating Debenture Redemption Reserve (DRR) in case of privately placed debentures. Since the Debenture issues of the Company till date are through private placement, as such no DRR has been created.

8.2 Details of Housing and Property Loans and Contingency Provisions

Housing and property loans and provision in respect thereof on account of standard, sub standard, doubtful and loss assets are recorded in accordance with the guidelines on prudential norms as specified by National Housing Bank and its circular NHB.HFC. DIR-3/CMD/2011 dated August 5, 2011 in respect of Housing and Non Housing Loans are as follows:

8.3 provision for Contingencies

The Company has made full provisions for Contingencies for diminution in investment value and on standard as well as on non-performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company has maintained additional provision amounting to Rs. 418 lakh (Rs. 901 lakh).

9.1 Loans repayable on demand and other short term loans comprising of Cash credit facilities from banks and are secured by a first charge by way of hypothecation of book debts of specific loan assets of the company and are further secured by negative lien on the underlying specific properties and / or secured by demand promissory notes. Certain Cash credit facilities are also secured by way of a first pari passu charge along with other secured loans read with Note 5.2. All cash credit facilities are repayable as per the contracted/ roll over term.

11.1 As required under section 124 of the Companies Act, 2013, the Company has transferred unclaimed dividend of the year 2006-07Rs.9 lakh (Rs. 8 lakh), unclaimed Interim dividend of the year 2007-08Rs.5 lakh (Rs. 8 lakh) and Rs. 21 lakh (Rs. 19 lakh) towards unclaimed Deposits and interest accrued thereon to Investor Education & Protection Fund (IEPF) during the year. There were no amounts due for transfer to IEPF on the date of Balance Sheet.

13.1 Investment in Government and other SLR Securities aggregating to Rs. 21,646 lakh (Rs. 15,087 lakh) carry a floating charge created in favor of depositors in the Fixed Deposit schemes of the Company (read with Note 5.2 and Note 5.4 above).

13.2 During the year Company has subscribed for 1,68,43,092 number of shares @ Rs. 10 each for Rs. 1,684 lakh (Rs. 729 lakh) to maintain its holding at 50% and to augment the resources of the DHFL Pramerica Life Insurance Co Limited, a registered life insurance company in India regulated by IRDA.

14.1 Other loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not began in last three years and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). Other loans also include loans granted to Small & Medium Enterprise (SME) and certain part are unsecured in terms of the particular scheme of an aggregate amount of Rs. 478 lakh.

14.2 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/or undertaking to create a security and/or hypothecation of assets and are considered appropriate and good.

14.3 Composite Loans sanctioned (i.e. loans allowed for purchase of plot and self construction of house) on or before March 31,2012, in which construction has not started till March 31,2015, as per information available with the Company, is excluded from Housing Loans and regrouped under Other Loans (Non Housing) in above outstanding as on March 31, 2015 aggregating to Rs. 8,918 lakh (Rs. 2,206 lakh).

14.4 Insurance portion of Housing Loan is excluded from Housing Loan and regrouped in Other Loan. The insurance portion amounting to Rs. 74,225 lakh to meet the cost of the insurance premium to secure the borrower''s life and thereby further secure the loan portfolio by way of risk mitigation method and to secure the Company''s Housing loan portfolio against any eventuality.

14.5 The Company has entered into Loan Syndication arrangements with certain public and private sector banks to provide Housing loan to borrowers wherein DHFL originates the loan files and gets it processed under common credit norms. The said banks have agreed to participate upto 50% of the disbursed loan portfolio under loan syndication arrangement. Entire/partial processing fees and other charges/ income on these loans, depending upon the syndication arrangements, accrues to DHFL. The Company has derecognised the said loan portion syndicated to others in its books.

14.6 The Company has entered into Loan Syndication arrangements with DHFL Vysya Housing Finance Limited and Aadhar Housing Finance Limited in the earlier year to provide Housing and Property Loans to borrowers wherein DHFL originates the loan files through its branches and gets it processed under common credit norms at the Central Processing Unit. The loan syndicate participants have agreed to participate in the disbursed loan portfolio under loan syndication arrangement. During the year Company has disbursed Rs. 475 lakh (Rs. 4,694 lakh) under joint syndication out of which Rs. 155 lakh (Rs. 1,801 lakh) has been shared by syndicate partners, which has been derecognised.

14.7 The Company has acquired certain assets under SARFAESI which are retained for the purpose of sale under the rules and regulations of SARFAESI involving Rs. 8,093 lakh (Rs. 4,419 lakh) out of 212 (148) cases which are part of NPA portfolio for which necessary provisions have already been made.

14.8 The Company has securitized / assigned pool of certain housing and property loans and managed servicing of such loan accounts. The balance outstanding in the pool, as at the reporting date aggregates to Rs. 584,476 lakh (Rs. 422,544 lakh). These assets have been de-recognised in the books of the Company. The Company is responsible for collection and getting servicing of this loan portfolio on behalf of buyers / investors. In terms of the said securitization/assignment agreements, the Company pays to buyer/investor on monthly basis the prorata collection amount as per individual agreement terms.

14.9 Housing and other property loans (current and non-current) includes Rs. 261 lakh (Rs. 139 lakh) given to the key managerial persons of the company under the normal course of business.

18.1 Current portion of balances with Banks in Deposit Accounts includes deposits under lien aggregating to Rs. 17,153 lakh (Rs. 4,730 lakh) being earmarked for SLR requirements of NHB. Rs. 643 lakh (Rs. 780 lakh) being margin money for bank guarantees, Rs. 25,853 lakh (Rs. 24,051 lakh) being securitization comforts provided to various Trustees/ buyer, Nil (Rs. 2,575 lakh) toward sinking fund requirement of debenture provided to Trustee of debentures and Rs. 4,495 lakh (Rs. 1,300 lakh) under lien against Interest rate swaps.

20.1 Non Current portion of balances with Banks in Deposit Accounts includes deposits under lien aggregating to Rs. 7,918 lakh (Rs. 7,088 lakh) being securitization comforts provided to various Trustees/ buyer, Rs. 9,180 lakh (Rs. 11,153 lakh) being earmarked for SLR requirements of NHB and Rs. 2,575 lakh (Nil) towards sinking fund requirement of debenture provided to Trustee of debentures.

27 LEASES

Operating Lease

The Company has taken certain premises for office and residential use for its employees under cancellable and non cancellable operating lease agreements. Terms of the lease include terms for renewal, increase in rents in future periods and terms of cancellation. The total lease rent recognized as an expense during the year under the lease agreements amounts to Rs. 2,385 lakh ( Rs. 2,051 lakh).

28 Two subsidiaries of the Company were amalgamated into the Company pursuant to the Scheme of amalgamation (Scheme) under Section 391 to 394 of the Companies Act, 1956 approved by the Board of Directors of all the three companies and sanctioned by the Hon''ble High Court of judicature at Bombay vide its order dated July 27, 2012 and by the Hon''ble High Court of judicature at Delhi vide its order dated 4th January,2013 which were filed with the Registrar of Companies on January 31,2013 being the effective date for the amalgamation scheme. In terms of the above scheme the Assets and Liabilities of the subsidiary companies were amalgamated with DHFL at their respective fair value in the earlier years. Proportionate Fair value appreciation surplus amounting to Rs. 4,455 lakh (Rs. 4,162 lakh) has been amortized out of the capital reserve in terms of the valuation report of the scheme.

29 In the opinion of the Board, the assets of the Company have a value on realization in the ordinary course of business atleast equal to the amount at which they are stated, net of contingency provisions.

30 The Company''s Income Tax Assessment has been completed upto assessment year 2012-13. In respect of amalgamating Company, additional demands have been raised by the department which are pending in appeal at various forums. Company has partially deposited the additional tax so demanded under protest. No provision has been made in the books against such demands as the Company believes that the cases will be decided in its favour based on legal advice and similar precedent case laws available.(Refer Note 33)

31 INTEREST RATE SWAPS:

In compliance with Asset Liability Management Policy, the company had in past entered into interest rate swaps of notional value aggregating to Rs. 9,500 lakh to hedge its interest rate risk which were designated as fair value hedges, in accordance with the generally accepted accounting principles.

The changes in the fair value of these derivatives are recorded in the income statement, together with any changes in the fair value of the underlying asset or liability that are attributable to the hedged risk. The Mark to Market (MTM) losses on these swaps recognized in past, is amortized over the period of the hedges. Accordingly, net gain in current year on hedging of interest rate swaps and write back of MTM losses amounting to Rs. 27 lakh (Rs. 27 lakh) has been adjusted in "Interest and Finance cost".

32 The Company operates under the principal business segment viz. "Providing loans for construction or purchase of residential property and loans against property". Further, the Company is operating in a single geographical segment. Accordingly, disclosures relating to primary and secondary business segments under the Accounting Standard on Segment Reporting (AS-17) notified u/s 133 of the Companies Act, 2013 are not applicable to the Company.


Mar 31, 2014

1.1 Basis of preparation of financial statements:

a) The financial statements have been prepared under the historical cost convention on accrual basis, except pertaining to amalgamation accounting in the previous year, in accordance with the generally accepted accounting principles, provisions of the Companies Act, 1956, Housing Finance Companies, (NHB) Directions, 2010, The National Housing Bank Act 1987 and Accounting Standards (AS) notified u/s 211(3C) of the Companies Act, 1956 read with general circular 15 / 2013 dated September 13, 2013, issued by the ministry of the corporate affiars, in respect of sec 133 of Companies Act 2013.

b) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the Company.

c) The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Management believes that the estimates used in preparation of the financial statement are prudent and reasonable. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

d) Based on the nature of its activities, the Company has determined its operating cycle as 12 months for the purpose of classification of its Assets and Liablilies as current and non current.

e) Amounts in the financial statements are presented in Hlakh, except for per share data and as otherwise stated. All exact amounts are stated with suffix "/-".

1.2 Revenue Recognition:

a) Interest on housing loans:

Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company''s financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI monthly interest is payable.

Interest on performing assets is recognised on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b) Dividend income on investments, processing fees and penal interest income on delayed EMI / PEMI are recognised on receipt basis.

c) Income from services and interest bearing investment is recognised on accrual basis.

1.3 Interest & Other related Financial Charges:

Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme.

Interest and other related financial charges are recognised as an expense in the period for which they relate as specified in Accounting Standard (AS 16) on "Borrowing Costs".

1.4 Foreign Exchange Transactions:

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rates prevailing on the date of the Balance Sheet. Any gain or losses on account of exchange differences either on settlement or on translation are recognised in the Profit and Loss Account.

In respect of Forward Exchange Contracts the premium or discount arising at the inception of forward exchange contracts is amortised as expense or income over the life of the contract. Exchange differences on such contracts on reporting dates are recognised in the Statement of Profit and Loss. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognised as income or as an expense in that year.

1.5 Provision for Contingencies:

Provision for Contingencies has been made for diminution in investment value and on standard as well as on non-performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company also makes certain additional provision to meet unforeseen contingencies.

1.6 Investments:

In accordance with Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank, Investments are either classified as current or long term based on the management''s intention at the time of purchase. On initial recognition, all investments are measured at cost. The cost comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and stamp duty.

Long term investments are carried at cost less provision for diminution, other than temporary, in the value of investments. Current investments are stated at lower of cost and fair value.

1.7 Tangible Fixed Assets:

Fixed Assets are stated at cost less accumulated depreciation and impaired losses, if any. All directly attributable costs including borrowing cost, net of cenvat credit, till the asset is put to use is shown as capital work in progress and is capitalised thereafter. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Assets held under finance leases are depreciated over the estimated useful life of the asset or the lease term whichever is lesser.

1.8 Intangible Assets:

Intangible assets including software are capitalised where it is expected to provide future enduring economic benefits. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses, if any. Intangible assets are amortised over the estimated useful life of the asset.

1.9 Impairment of Assets:

An asset is treated as impaired when it is unusable and the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognised in earlier accounting periods is reversed if there has been a change in the estimate of recoverable amount as specified in Accounting Standard (AS 28) on "Impairment of Assets".

1.10 Leases:

Operating Leases

Lease rentals in respect of assets taken on "Operating Leases" are charged to the Statement of Profit and Loss account on straight line basis over the lease term.

Finance Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the lower of the fair value and present value of the minimum lease payments at the inception of the lease and are accordingly disclosed. The capital element of the leasing commitments is shown as Secured liabilities. Lease payments are apportioned between the finance charges and reduction of the corresponding liability based on the implicit rate of return.

1.11 Statutory / Special Reserve:

The Company creates Statutory / Special Reserve every year out of its profits in terms of Sec 36(1) (viii) of the Income Tax Act, 1961 read with Sec 29C of the National Housing Bank Act, 1987.

1.12 Prepaid Expenses:

Financial Expenses incurred during the year which provide benefit in several accounting years and brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to the current year and balance is treated as prepaid expenses to be adjusted on pro-rata time basis in the future accounting years.

1.13 Employees Retirement Benefits:

a) Company''s contribution in respect of Employees'' Provident Fund is made to Government Provident Fund and is charged to the Statement of Profit & Loss.

b) Gratuity Fund Scheme is considered as defined benefit plans. The Company''s liability is determined on the basis of an actuarial valuation using the projected credit unit method as at Balance Sheet date. Actuarial Gains / Losses are recognised immediately in the Statement of Profit & Loss in the year on which they arise.

c) Leave Encashment for both short term and long term are accounted for on actuarial valuation at the year end using the projected credit unit method. Actuarial Gains / Losses are recognised immediately in the Statement of Profit & Loss in the year on which they arise.

1.14 Earnings per share:

The Basic earning per share and diluted earning per share have been computed in accordance with Accounting Standard (AS- 20) on, "Earnings Per Share" and is also shown in the Statement of Profit and Loss.

1.15 Accounting for Taxes:

Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS-22) on "Accounting for Taxes on Income". The Deferred Tax Assets and liabilities for the year, arising out of timing difference, are reflected in the Statement of Profit and Loss. The cumulative effect thereof is shown in the Balance Sheet. The Deferred Tax Assets, if any, are recognised only to the extent that there is reasonable certainity that the assets will be realised in future. However if there are carried forward loss / depreciation then the deffered tax if any, are recognised only to the extent that there is virtual certainity that the assets will be realised in future.

1.16 Provisions, Contingent Liability and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

1.17 Housing and Other Property Loans:

Housing Loans include outstanding amount of Housing Loans and other Property Loans disbursed directly or indirectly to individual and other borrowers. Other Property loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not begun in last three years and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). EMI and instalments due from borrowers against the housing loans receivable for less than three months, are treated as trade receivables and are shown as current assets.

1.18 Securitised Assets:

Securitised and Assigned Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of such assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.


Mar 31, 2013

1.1 Basis of preparation of Financial Statements :

a) The financial statements have been prepared under the historical cost convention on accrual basis, except pertaining to amalgamation accounting, in accordance with the generally accepted accounting principles, provisions of the Companies Act, 1956, Housing Finance Companies, (NHB) Directions, 2010 and Accounting Standards (AS) notified u/s 211(3C) of the Companies Act, 1956.

b) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the Company.

c) The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialise.

d) Amounts in the financial statements are presented in Rs. lacs, except for per share data and as otherwise stated. All exact amounts are stated with suffix"/-".

1.2 Revenue Recognition

a. Interest on housing loans :

Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company''s financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI monthly interest is payable.

Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b. Dividend income on investments, processing fees and penal interest income on delayed EMI/PEMI are recognised on receipt basis.

c. Income from services and interest bearing investment is recognised on accrual basis.

1.3 Interest & Other Related Financial Charges :

Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and other related financial charges are recognized as an expense in the period for which they relate as specified in Accounting Standard (AS 16) on "Borrowing Costs".

1.4 Foreign Exchange Transactions :

Transactions in foreign currencies are recorded at the exchange rates prevailing on the date of transactions. Transactions remaining unsettled are translated at the exchange rates prevailing on the date of the Balance Sheet. Any gain or losses on account of exchange differences either on settlement or on translation are recognized in the Profit and Loss Account.

In respect of Forward Exchange Contracts the premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts on reporting dates are recognized in the statement of profit and loss. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense in that year.

1.5 Provision for Contingencies :

Provision for Contingencies has been made for diminution in investment value and on standard as well as on non-performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company also makes certain additional provision to meet unforeseen contingencies.

1.6 Investments :

In accordance with Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank, Investments are either classified as current or long term based on management''s intention at the time of purchase. On initial recognition, all investments are measured at cost. The cost comprises of purchase price and directly attributable acquisition charges such as brokerage, fees and stamp duty.

Long term investments are carried at cost less provision for diminution, other than temporary, in the value of investments. Current investments are stated at cost and provision for dimunition is made wherever applicable.

1.7 Tangible Fixed Assets :

Fixed Assets are stated at cost less accumulated depreciation and impaired losses, if any. All directly attributable costs including financing cost, net of cenvat credit, till the asset is put to use is shown as capital work in progress and is capitalised thereafter. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956. Assets held under finance leases are depreciated over the estimated useful life of the asset or the lease term whichever is lesser.

1.8 Intangible Assets :

Intangible assets including software are capitalized where it is expected to provide future enduring economic benefits. Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortization and accumulated impairment losses, if any.

1.9 Impairment of Assets :

An Asset is treated as impaired when it is unusable and the carrying cost of the Asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognised in earlier accounting periods is reversed if there has been a change in the estimate of recoverable amount as specified in Accounting Standard (AS 28) on "Impairment of Assets".

1.10 Leases:

Operating Leases

Lease rentals in respect of assets taken on "Operating Leases" are charged to the profit and loss account on straight line basis over the lease term.

Finance Leases

Finance leases, which effectively transfer to the Company substantially all the risks and benefits incidental to ownership of the leased item, are capitalized at the lower of the fair value and present value of the minimum lease payments at the inception of the lease and are accordingly disclosed. The capital element of the leasing commitments is shown as Secured liabilities. Lease payments are apportioned between the finance charges and reduction of the corresponding liability based on the implicit rate of return.

1.11 Special Reserve :

The Company creates Special Reserve every year out of its profits in terms of Sec 36(1) (viii) of the Income Tax Act, 1961 read with Sec 29C of the National Housing Bank Act, 1987.

1.12 Prepaid Expenses :

Financial Expenses incurred during the year which provide benefit in several accounting years and brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to the current year and balance is treated as prepaid expenses to be adjusted on pro-rata time basis in the future accounting years.

1.13 Employees Retirement Benefits :

a) Company''s contribution in respect of Employees'' Provident Fund is made to Government provident fund and is charged to the Statement of Profit & Loss.

b) Gratuity and Leave Encashment payable at the time of retirement are charged to the Statement of Profit & Loss on the basis of actuarial valuation as required under AS-15.

1.14 Earnings Per Share :

The earnings per share has been computed as per Note 25 in accordance with Accounting Standard (AS-20) on, "Earnings Per Share" and is also shown in the Statement of Profit and Loss.

1.15 Accounting for Taxes :

Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS-22) on "Accounting for Taxes on Income". The Deferred tax assets and liabilities for the year, arising out of timing difference, are reflected in the Statement of Profit and Loss. The cumulative effect thereof is shown in the Balance Sheet. The Deferred tax assets, if any, are recognised only if there is a reasonable certainty that it will be realized in future.

1.16 Provisions, Contingent Liability and Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent Liabilities are not recognised but are disclosed in the notes. Contingent Assets are neither recognised nor disclosed in the financial statements.

1.17 Housing and Other Property Loans :

Housing Loans include outstanding amount of Housing Loans and other Property Loans disbursed directly or indirectly to individual and other borrowers. Other Property loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not began in last three years and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). EMI and instalments due from borrowers against the housing loans receivable for less than three months, are treated as trade receivables and are shown as current assets.

1.18 Securitised Assets :

Securitised and Assigned Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of such assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.


Mar 31, 2012

1.1 Basis of preparation of financial statements :

a) The financial statements have been prepared under the historical cost convention on accrual basis, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 and Housing Finance Companies, (NHB) Directions, 2010. Accounting Standards (AS) referred to in the notes are as issued by the Institute of Chartered Accountants of India.

b) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the Company.

c) The preparation of financial statements requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

d) Amounts in the financial statements are presented in Rs. lacs, except for per share data and as otherwise stated. All exact amounts are stated with suffix.

2.2 Interest on housing loans :

Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company's financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre- EMI monthly interest is payable.

2.3 Interest & other related financial charges :

Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest, when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and other related financial charges are recognized as an expense for the period for which they are incurred as specified in Accounting Standard (AS 16) on "Borrowing Costs".

2.4 Revenue Recognition :

a) Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b) Dividend income on investments, processing fees and penal interest income on delayed EMI/PEMI are recognised on receipt basis.

c) Income from other services is recognised on accrual basis.

2.5 Foreign Exchange Transactions :

Transactions in foreign currencies are recorded at the rates prevailing on the date of the transactions. Monetary items denominated in foreign currency are stated at contracted rates as those are covered by forward contracts. Premium for forward contracts is recognised as expenditure over the life of the contract.

2.6 Provision for Contingencies :

Provision for Contingencies has been made for diminution in investment value and on standard as well as on non-performing housing loans and other property loans as per the Prudential Norms prescribed by the National Housing Bank. The Company also makes certain additional provision to meet unforeseen contingencies.

2.7 Investments :

All Investments are stated at cost as per Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank. Investment in unquoted shares being non current investment is stated at cost and provision for diminution is made only if such diminution is other than temporary. Investments in mutual funds and quoted shares are in the nature of current Investments and full provision for diminution in the value of said Investments is made.

2.8 Fixed Assets :

Fixed Assets are stated at cost inclusive of expenses incidental thereto. All cost, including financing cost till the asset is put to use are capitalised net of cenvat credit wherever applicable. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

2.9 Impairment of Assets :

An asset is treated as impaired when the carrying cost of the asset exceeds its recoverable value. An impairment loss is charged to the Statement of Profit & Loss in the year in which an asset is identified as impaired. The impairment loss recognised in earlier accounting periods is reversed if there has been a change in the estimate of recoverable amount as specified in Accounting Standard (AS 28) on "Impairment of Assets".

2.10 Intangible Assets :

Intangible Assets comprise of software and are stated at cost incurred on purchases and for bringing the same to its working condition and are amortised as per the provisions of the Companies Act, 1956.

2.11 Special Reserve :

The Company creates Special Reserve every year out of its profits in terms of Sec 36(1) (viii) of the Income Tax Act, 1961 read with Sec 29C of the National Housing Bank Act, 1987.

2.12 Prepaid Expenses :

Financial Expenses incurred during the year which provide benefit in several accounting years and brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to the current year and balance is treated as prepaid expenses to be adjusted on pro-rata time basis in the future accounting years.

2.13 Employees Retirement Benefits :

a) Company's contribution in respect of Employees' Provident Fund is made to Government provident fund and is charged to the Statement of Profit & Loss.

b) Gratuity and Leave Encashment payable at the time of retirement are charged to the Statement of Profit & Loss on the basis of actuarial valuation as required under AS 15.

2.14 Earnings per share :

The earnings per share has been computed as per Note "25" in accordance with Accounting Standard (AS 20) on, "Earnings Per Share" and is also shown in the Statement of Profit and Loss.

2.15 Income Tax :

Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS 22) on "Accounting for Taxes on Income". The Deferred tax assets and liabilities for the year, arising out of timing difference, are reflected in the Statement of Profit and Loss. The cumulative effect thereof is shown in the Balance Sheet. The Deferred tax assets, if any, are recognised only if there is a reasonable certainty that the assets will be realized in future.

2.16 Housing and Other Property Loans :

Housing Loans include outstanding amount of Housing Loans and other Property Loans disbursed directly or indirectly to individual and other borrowers. Other Property Loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not began in last three years and loan against lease rental income from properties in accordance with directions of National Housing Bank (NHB). EMI and instalments due from borrowers against housing loans other than EMI's/PEMI's receivable for less than three months, which are treated as trade receivables, are shown as current assets.

2.17 Securitised Assets :

Securitised Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of securitised assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.

3.1 During the year, the Company obtained approval of the shareholders by way of postal ballot pursuant to Sec 192A of the Companies Act, 1956 on 19th January, 2012 for placement of equity shares to Qualified Institutional Buyers (QIBs). The Committee of the Board of Directors from time to time has also issued and allotted shares along with equity shares under ESOS scheme as under:

a) On the 29th February, 2012, the Company has issued and allotted to QIBs 1,19,09,873 (1,68,69,095) equity shares of Rs. 10/- each, at a price of Rs. 255.50 per equity share (including a premium of Rs. 245.50 per equity share), aggregating to Rs. 30,429 lacs and has issued and allotted on preferential basis NIL (50,00,000) equity shares of Rs. 10/- each to promoter and other investor.

b) During the year, the Company has allotted, from time to time, 301,264 (291,930) number of equity shares of Rs. 10/- each to various eligible employees under (ESOS 2008) at a price of Rs. 53.65 per equity share (including a premium of Rs. 43.65 per equity share) aggregating to Rs. 162 lacs as approved in the AGM dated 23rd July, 2007 and allotted at the reconsidered price approved in the EOGM dated 31st March, 2009.

c) During the year, the Company has allotted, from time to time, 202,442 (238,833) number of equity shares of Rs. 10/- each to various eligible employees under (ESOS 2009) at a price of Rs. 141/- per equity share (including a premium of Rs. 131/- per equity share) aggregating to Rs. 285 lacs as approved in the AGM dated 23rd July, 2007.

3.2 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. The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

3.3 The Board of Directors, has proposed a dividend to be paid out of current year profits @ Rs. 3.50 (Rs. 3.50) per equity share to the equity shareholders.

3.6 Stock option plans:

Employee Stock Option Scheme 2008 (ESOS-2008) was implemented by the Company. 14,22,590 equity share options were granted under (ESOS-2008) in 2008-09 to the employees as approved by the remuneration and compensation committee of the directors of the Company at Rs. 53.65 per share, the reconsidered price approved in the EOGM dated 31st March, 2009.

Employee Stock Option Scheme 2009 (ESOS-2009) was implemented by the Company. 12,75,000 equity share options were granted under (ESOS-2009, Plan I) in 2009-10 and additional 12,34,670 equity share options were approved to be granted under (ESOS-2009, Plan II) in 2010-11 to the employees by the remuneration and compensation committee of the directors of the Company at Rs. 141/- per share, the price approved in the remuneration and compensation committee meeting held on 25th November, 2009.

5.1 Non Convertible Debentures (NCD) (current and non current portion) amounting to Rs. 185,020 lacs (Rs. 119,067 lacs) are secured /to be secured by way of first charge as per note 5.2 herein below and are redeemable at par, in one or more instalments, on various dates, with the earliest redemption being 17th May, 2012 and the last being 22nd September, 2021.

5.2 All Secured term loans (Current and Non Current portion) from the National Housing Bank, other Banks, Asian Development Bank, Financial Institutions and Secured Non Convertible Debentures are secured/to be secured by way of first charge to and in favour of participating Banks, Institutions, National Housing Bank and Debenture Trustees jointly ranking pari passu (read with Note no. 9.1), inter-se, on the Company's whole of the present and future book debts outstanding, investments including all the receivables of the Company and other movable assets, wherever situated, excluding SLR assets (under process of exclusion in favour of trustees for the deposit holders) read with Note no. 5.3 hereinafter. They are further secured / to be secured on pari passu basis by constructive delivery of various title deeds of certain immovable properties of the Company, to Union Bank of India, acting for itself and as an agent of other participating lenders and Debenture trustees, and are also guaranteed by the promoter directors of the Company.

5.3 The National Housing Bank directives require all HFC's accepting public deposits to create a floating charge on the statutory liquid assets maintained in favour of depositors through the mechanism of a trust deed. The Company has accordingly appointed in earlier year a SEBI approved trustee company i.e. GDA Trustee and Consultancy Ltd. as trustee for the above by executing the trust deed and is creating necessary required charge on SLR assets.

5.4 The Company has raised Rs. 7,500 lacs during the year through issue of long term Unsecured, Redeemable, Non Convertible Debentures. These Debentures are redeemable at par on 26th March, 2022. These Debentures are Sub-ordinate to present and future senior debt holders of the Company and qualifies as Tier II Capital under the NHB Guidelines.

5.5 All fixed deposits, including short term fixed deposits, are repayable as per individual contracted maturities ranging upto 12 months and 84 months from the date of deposit. The interest is payable on contracted terms depending upon the scheme opted by the depositor.

5.6 Department of Company affairs has exempted Housing Finance Companies registered with National Housing Bank from the requirement of creating Debenture Redemption Reserve (DRR) in case of privately placed debentures. Since the Debenture issues of the Company till day are through private placement no DRR has been created.

8.1 The Company has written off Rs. 236 lacs (Rs. 77 lacs) as bad debts and by way of one time settlement to recover some of its NPA and Loss Accounts. The Company has withdrawn Rs. 236 lacs (Rs. 77 lacs) from contingency provisions created out of profits of earlier years.

8.3 Provision for Contingencies

The National Housing Bank (NHB) vide its circular dated 5th August, 2011 read with circular dated 19th January, 2012 has introduced additional contingency provisioning requirements. The Company has met the above requirement by utilizing excess reserve created in earlier year and by making further provision during the year. As a matter of prudent risk management and based on experience, the Company has created on its own in the past, additional reserve on its standard assets towards contingencies beyond the NHB requirements. The Company has fully utilized these additional contingency reserves for meeting the above requirements of the NHB and has also provided balance during the year. The Company has made during the year additional provision beyond NHB requirement of Rs. 1,051 lacs.

9.1 Other short term loans from banks comprises of Cash credit facilities secured by way of a first pari passu charge along with other secured loans read with Note no. 5.2. These cash credit facilities are repayable as per the contracted/ roll over term.

10 TRADE PAYABLES:

There is no amount due and payable to 'Suppliers' registered under the Micro, Small and Medium Enterprises Development Act, 2006 at the end of the year. No interest has been paid/ is payable by the Company during/for the year to these 'Suppliers'. The above information takes into account only those suppliers who have submitted their registration details or has responded to the inquiries made by the Company for this purpose.

11.1 As required under section 205 (C) of the Companies Act, 1956, the Company has transferred unclaimed dividend of the year 2003-04 (2002-03) Rs. 5 lacs (Rs. 4 lacs) to Investor Education & Protection Fund (IEPF) during the year. There were no amounts due for transfer to IEPF on the date of Balance Sheet.

13.1 Investment in Government Securities aggregating to Rs. 4,887 lacs (Rs. 3,019 lacs) carry a floating charge created/to be created in favour of depositors in the Fixed Deposit schemes of the Company (read with Note no. 5.2 and Note no.5.3 above).

13.2 As required by NHB, the Company has divested its holding in DHFL Vysya Housing Finance Limited from 58.20% to 9.47% during the year. The Company with a view to focus on its core business, has also completely divested its holding in DHFL Property Services Limited during the year. Accordingly, DHFL Vysya Housing Finance Limited, Aadhar Housing Finance Private Limited and DHFL Property Services Limited are no longer subsidiaries of the Company. The Company has earned profit of Rs. 3,187 lacs on sale of shares of DHFL Vysya Housing Finance Limited.

14.1 Other Property Loans consists of non-housing loans such as mortgage loans, project loans (non- residential), commercial loans, plot loans, lease rental finance and other loans which are all against real estate properties and which are not covered under the housing loan criteria of National Housing Bank.

14.2 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/or undertaking to create a security and are considered appropriate and good.

14.3 Composite loans sanctioned (i.e. loans allowed for purchase of plot and self construction of house) on or before 31st March, 2009, in which construction has not started till 31st March, 2012, as per information available with the Company, is excluded from housing loans and regrouped under other property loans (non housing) in above outstanding as on 31st March, 2012 aggregating to Rs. 1,256 lacs (Rs. 1,097 lacs).

14.4 The Company has entered into loan syndication arrangements with certain public sector banks to provide Housing loan to borrowers wherein DHFL originates the loan files from branches and surrounding areas of such banks and also from open market and gets it processed under common credit norms at the Central Processing Unit set up in the premises of such banks. The said banks have agreed to participate upto 50% of the disbursed loan portfolio under loan syndication arrangement. Entire processing fees and other charges / income on above accrued to the Company (DHFL). The Company has derecognised above loan portion syndicated to others in its books.

14.5 The Company has also entered into loan syndication arrangements with First Blue Housing Finance Limited, DHFL Vysya Housing Finance Limited and Aadhar Housing Finance Limited to provide housing and property loans to borrowers wherein DHFL originates the loan files through its branches and gets it processed under common credit norms at the Central Processing Unit. The loan syndicate participants have agreed to participate in the disbursed loan portfolio under loan syndication arrangement. The Company has derecognised above loan portion syndicated to others in its books.

14.6 The Company has acquired certain assets under SARFAESI which are retained for the purpose of sale under the rules and regulations of SARFAESI involving Rs. 1,403 lacs (Rs. 673 lacs) out of 163 (141) cases which are part of NPA portfolio for which necessary provisions have already been made.

14.7 During the year the Company has securitized pool of housing and property loans and managed the joint syndicated loans where banks and others have participated aggregating to Rs. 173,927 lacs (Rs. 3,776 lacs). These assets have been de-recognised in the books of the Company as stated above. The Company is responsible for collection and getting servicing of the securitized portfolio on behalf of the buyer investor. In terms of the securitization agreement, the Company pays to buyer /investor/participant on monthly basis the collection amount, subject to retention of agreed extra interest spread for the Company.

26 The Board of Directors in it's meeting held on 28th September, 2011 have approved Scheme of Amalgamation of its subsidiary companies viz.First Blue Home Finance Limited and DHFL Holdings Private Limited with the Company, to be effective from 1st April, 2011. The share exchange ratio has been approved by the Board of all the companies based on the valuation report of Ernst & Young Private Limited and fairness report of Standard Chartered Bank at 10 shares of the Company for 97 shares of First Blue Home Finance Limited, which works out to a swap ratio of 10:97 and subsequently by the shareholders of the Company. The Company has filed an application with the Hon'ble High Court of Mumbai and Delhi under Section 391 to 394 of the Companies Act, 1956 for its approval.

27 In the opinion of the Board, the assets of the company have a value on realization in the ordinary course of business atleast equal to the amount at which they are stated, net of contingency provisions.

28 The Company's Income tax assessment has been completed up to assessment year 2009-10 as per the return of income filed by the Company.

29 The Company has derecognized Interest income on Non-Performing Assets as on 31st March, 2012 of Rs. 1,054 lacs (Rs. 439 lacs).

30 Dividend includes Rs. 161 lacs (Rs. 161 lacs) and Interest income includes Rs. 107 lacs (Rs. 58 lacs) received from then Subsidiary Company.

31 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.


Mar 31, 2011

1. Basis of preparation of Financial Statements:

a) The financial statements have been prepared under the historical cost convention, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 and Housing Finance Companies, (NHB) Directions, 2010. Accounting Standards (AS) referred to in the notes are as issued by the Institute of Chartered Accountants of India.

b) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the Company.

c) The preparation of financial statements requires Management to make estimates and assumptions that effect the reported amounts of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognised in the period in which the results are known / materialised.

2. Interest on Housing Loan :

Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Company's financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI monthly interest is payable.

3. Interest & other related Financial Charges:

Interest accrued on Cumulative Fixed Deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and other related financial charges are recognized as an expense for the period for which they are incurred as specified in Accounting Standard (AS 16) on "Borrowing Costs".

4. Revenue Recognition:

a) Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b) Dividend income on investments, processing fees and penal interest income on delayed EMI/PEMI are recognised on receipt basis.

c) Income from other services is recognised on accrual basis.

5. Foreign Exchange Transactions:

Transactions in foreign currencies are recorded at the rates prevailing on the dates of the transactions. Monetary items denominated in foreign currency are stated at contracted rates as those are covered by forward contracts. Premium for forward contracts is recognised as expenditure over the life of the contract.

6. Provision for Contingencies:

Provision for Contingencies has been made for diminution in investment value and on non-performing housing loans and other assets as per the Prudential Norms prescribed by the National Housing Bank. The Company also makes certain additional provision to meet unforeseen contingencies.

7. Investments:

All Investments are stated at cost as per Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank. Investment in unquoted shares being long term investment is stated at cost and provision for diminution is made only if such diminution is other than temporary. Investments in mutual funds and quoted shares are in the nature of current Investments and full provision for diminution in the value of said Investments is made.

8. Fixed Assets:

Fixed Assets are stated at cost inclusive of expenses incidental thereto. All cost, including financing cost till the asset is put to use are capitalised. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

9. Impairment of Assets:

An Asset is treated as impaired when the carrying cost of the Asset exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognised in earlier accounting periods is reversed if there has been a change in the estimate of recoverable amount as specified in Accounting Standard (AS 28) on "Impairment of Assets".

10. Intangible Assets:

Intangible Assets comprise of software and are stated at cost incurred on purchases and for bringing the same to its working condition and are amortised as per the provisions of the Companies Act, 1956.

11. Special Reserve:

The Company creates Special Reserve every year out of its profits in terms of Section 36(1) (viii) of the Income Tax Act, 1961 read with Section 29C of the National Housing Bank Act, 1987.

12. Prepaid Expenses:

Financial Expenses incurred during the year which provides benefit in several accounting years and Brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to the current year and balance is treated as prepaid expense to be adjusted on pro-rata time basis in the future accounting years.

13. Employees Retirement Benefits:

a. Company's contribution in respect of Employees' Provident Fund is made to Government Provident Fund and is charged to Profit & Loss Account

b. Gratuity and Leave Encashment payable at the time of retirement are charged to Profit & Loss Account on the basis of actuarial valuation as required under AS-15.

14. Earnings per share:

The earnings per share has been computed as per Schedule "O" in accordance with Accounting Standard (AS 20) on, "Earnings Per Share" and is also shown in the Profit & Loss Account.

15. Income Tax:

Income Tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS 22) on "Accounting for Taxes on Income". The Deferred Tax assets and liabilities for the year, arising out of timing difference, are reflected in the Profit and Loss account. The cumulative effect thereof is shown in the Balance Sheet. Deferred Tax assets, if any, are recognised only if there is a reasonable certainty that the assets will be realized in future.

16. Housing and Other Loans :

Housing Loans include outstanding amount of Housing Loan and Project Loan disbursed directly or indirectly to individual and other borrowers. Other loans include mortgage loan, non residential property loan, plot loan for self construction where construction has not began in last two years and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). EMI and installments due from borrowers against the housing loans are shown as current assets as loans and advances.

17. Securitised Assets:

Securitised Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of securitised assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.


Mar 31, 2010

1. Basis of preparation of financial statements:

a) The financial statements have been prepared underthe historical cost convention, in accordance with the generally accepted accounting principles and the provisions of the Companies Act, 1956 and Housing Finance Companies, (NHB) Directions, 2001. Accounting Standards (AS) referred to in the notes are as issued by the Institute of Chartered Accountants of India.

b) Accounting policies not specifically referred to otherwise are consistent with the generally accepted accounting principles followed by the Company.

2. Interest on housing loans :

Repayment of housing loans is by way of Equated Monthly Instalments (EMI) comprising principal and interest. Interest is calculated each year on the outstanding balance at the beginning of the Companys financial year or on monthly reducing balance in terms of financing scheme opted by the borrower. EMI commences once the entire loan is disbursed. Pending commencement of EMI, pre-EMI monthly interest is payable.

3. Interests, other related financial charges :

Interest accrued on cumulative fixed deposits and payable at the time of maturity is clubbed with the principal amount on the date of periodical rest when interest is credited in Fixed Deposit account in accordance with the particular deposit scheme. Interest and other related financial charges are recognized as an expense for the period for which they are incurred as specified in Accounting Standard (AS 16) on "Borrowing Costs".

4. Revenue Recognition:

a) Interest on performing assets is recognized on accrual basis and on non-performing assets on realisation basis as per the guidelines prescribed by the National Housing Bank. The interest income (payment) is adjusted for gain (loss) on corresponding hedge contracts / interest swap derivatives, wherever executed.

b) Dividend income on investments and penal interest income on delayed EMI/PEMI are recognised on receipt basis.

5. Foreign Exchange Transactions:

Transactions in foreign currencies are recorded at the rates prevailing on the dates of the transactions. Monetary items denominated in foreign currency are stated at contracted rates as those are covered by forward contracts. Premium forforward contracts is recognised as expenditure overthe life of the contract.

6. Provision for Contingencies:

Provision for Contingencies has been made for diminution in investment value and on non-performing housing loans and other assets as per the Prudential Norms prescribed by the National Housing Bank. Company also makes certain additional provision to meet unforeseen contingencies.

7. Investments:

All Investments are stated at cost as per Accounting Standard (AS 13) on "Accounting for Investments" and the guidelines issued by the National Housing Bank. Investments in mutual funds and quoted shares are in the nature of current Investments and full provision for diminution in the value of said Investments is made.

8. Fixed Assets:

Fixed Assets are stated at cost inclusive of expenses incidental thereto. Depreciation on fixed assets is provided on straight-line method at the rates prescribed under Schedule XIV to the Companies Act, 1956.

9. Impairment of Assets:

An Asset is treated as impaired when the carrying cost of the Asset exceeds its recoverable value. Impairment Joss is charged to the Profit & Loss account in the year in which an asset is identified as impaired. The Impairment loss recognised in earlier accounting periods is reversed if there has been a change in the estimate of recoverable amount as specified in Accounting Standard (AS 28) on "Impairment of Assets".

10. Intangible Assets:

Intangible Assets comprise of software and are stated at cost incurred on purchase and for bringing the same to its working condition and are amortised as per the provisions of the Companies Act, 1956.

11. Special Reserve:

Company creates Special Reserve every year out of its profits in terms of Sec 36(1) (viii) of the Income Tax Act, 1961 read with Sec 29C of the National Housing Bank Act, 1987.

12. Prepaid Expenses:

Financial Expenses incurred during the year which provides benefit in several accounting years and Brokerage paid on long term fixed deposits has been treated as revenue expense only for the period relating to current year and the balance is treated as prepaid expense to be adjusted on pro-rata basis in future accounting years.

13. Employees Retirement Benefits:

a. Companys contribution in respect of Employees Provident Fund is made to Government provident fund and is charged to Profit & Loss Account.

b. Gratuity and Leave encashment payable at the time of retirement are charged to Profit & Loss Account on the basis of actuarial valuation as required under AS-15.

14. Earnings per share :

The earnings per share has been computed as per Schedule "O" in accordance with Accounting Standard (AS-20) on, "Earnings Per Share" and is also shown in the Profit & Loss Account.

15. Income Tax:

Income tax provision based on the present tax laws in respect of taxable income for the year and the deferred tax is treated in the accounts based on the Accounting Standard (AS-22) on "Accounting for Taxes on Income". The Deferred tax assets and liabilities for the year, arising out of timing difference, are reflected in the profit and loss account. The cumulative effect thereof is shown in the Balance sheet. The deferred tax assets, if any, are recognised only if there is a reasonable certainty that the assets will be realized in future.

16. Housing and Other Loans:

Housing Loans include outstanding amount of Housing Loans disbursed directly or indirectly to individual and other borrowers. Other loans include mortgage loan, non residential property loan and loan against the lease rental income from properties in accordance with directions of National Housing Bank (NHB). EMI due from borrowers against the housing loans are shown as current assets as loans and advances.

17. Securitised Assets:

Securitised Assets are derecognised in the books of the Company based on the principle of transfer of ownership interest over the assets. De-recognition of securitised assets and recognition of gain or loss arising on such securitisation is based on the Guidance Note on Accounting for Securitisation issued by the Institute of Chartered Accountants of India.

 
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