Notes to Accounts of HDFC Life Insurance Company Ltd.

Mar 31, 2025

AThe contingent liability denominated in foreign currency at the balance sheet date is disclosed by using the closing rate.

#Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/ assessment orders/appellate orders received by the Company from the respective tax Authorities. The Company has filed / in the process of filing appeals against the demand notices/assessment orders/appellate orders with the appellate authorities/Courts and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard.

During the year ended March 31, 2025, the Company received orders from the GST Adjudicating Authority confirming the tax demand of ' 1,04,134 Lakh as shown above, plus penalty @100% and interest as applicable. These tax demands relate to show cause cum demand notices raised by the Directorate General of GST Intelligence (DGGI) on account of disputed input tax credit (ITC) availed and utilised by the Company in respect of certain services. The Company had deposited ' 25,600 Lakh under protest with the GST Authority in these matters. The Company is in the process of filing appeals before the GST Appellate Authority contesting the issues raised in the orders. The Company continues to disclose such amounts of tax demand as contingent liabilities.

During the year ended March 31, 2025, the Company received assessment orders under section 143(3) of the Income-tax Act, 1961, for FYs 2020-21 and 2021-22. The addition/disallowance pertaining to certain expenses resulted in aggregate demand of ' 11,589 Lakh excluding interest of ' 3,658 Lakh. The Company has contested the addition/disallowance before the Commissioner of Income-tax (Appeals) and disclosed the said amount as Contingent Liability.

The amounts of statutory dues disclosed in the above table represent the principal tax demand and are exclusive of interest and penalty, which have been levied in terms of the applicable provisions of the respective statutes.

2. Pending litigations
The Company's pending litigations other than those arising in the ordinary course of insurance business comprise of claims against the Company primarily on account of proceedings pending with Tax authorities and Claims, under policies, not acknowledged as debts (net of reinsurance). The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and balance disclosed as the contingent liabilities as applicable, in note 1 of Schedule 16 (b). The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial statements as at March 31, 2025.

3. Actuarial assumptions
The policyholders' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency, and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation are as below:

a) Interest rate assumptions:
The valuation rate of interest is determined based on the expected return on existing assets, current asset mix, and expected investment return on the future investment taking into consideration the asset classes mix and expected future asset mix. The interest rates used for the valuation vary according to the type and term of the product & status of policy and are presented in the table below:

Claim expenses assumption is ' 180 per maturity/surrender claim and ' 3,558 for death claim as at March 31, 2025 (' 170 per maturity/surrender claim and '3,073 for death claim as at March 31, 2024). The renewal and claim expenses are at an inflation rate of 4%p.a. to 6% p.a. (for the year ended March 31, 2024: 4%p.a. to 6% p.a).

c) Mortality assumptions:
Mortality assumptions are set in accordance with Clause 5(2) of Schedule I Part III(a) of the Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, in reference to the published Indian Assured Lives Mortality (2012-14) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant's Mortality Table (2012-15).

d) Morbidity assumptions:
Morbidity assumptions are set in accordance with Clause 5(3) of Schedule I Part III(a) of the Insurance Regulatory and Development Authority of India (Actuarial, Finance and Investment Functions of Insurers) Regulations, 2024, in reference to the published CIBT 93 Table and are based on the latest experience analysis of the business.

e) Persistency assumptions:
The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:
If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period, then there could be a strain in the policyholder fund on account of the amount payable on free-look cancellation, to the extent the amount is higher than reserves held for that policy. In order to avoid the future valuation strain as a result of the free-look cancellations, reserves on account of the above are held. The free-look reserve is calculated as total strain for all policies that are eligible for free-look cancellations at the valuation date, multiplied by a factor, representing the expected assumptions for free-look cancellations.

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:
The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (for the year ended March 31, 2024: 14.56% p.a.).

B) Defined benefit plans:
I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (as) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

e) Actual return on plan assets of the Gratuity plan is a gain of ' 1,142 Lakh (Previous year ended March 31, 2024 gain of ' 1,262 Lakh).

f) The Company expects to fund ' 2,459 Lakh (Previous year ended March 31, 2024 ' Nil) towards the Company's Gratuity plan during FY 2025-26.

II. Basis used to determine the overall expected return:
Expected rate of return on investments of the Gratuity plan is determined based on the assessment made by the Company (Trust) at the beginning of the year on the return expected on its existing portfolio, along with the return on estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on suitable mark-up over benchmark Government Securities of similar maturities.

The estimates of future salary increases, considered in actuarial valuation take into account inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.

C) Gratuity for liaison office located at Dubai:
a) General description of defined plan

This is an unfunded defined benefit plan for the employees based out of the liaison office at Dubai under the United Arab Emirates (UAE) labour laws and regulations. The plan provides for lumpsum payment to vested employees who have rendered continuous service for more than a year in the following manner:

i) If an employee has served for less than 1 year, he is not entitled to any gratuity;

ii) If an employee has served for more than 1 year but less than 5 years, he is entitled to gratuity pay based on 21 days' salary for each year of service;

iii) If a worker has served more than 5 years, he is entitled to gratuity of 30 days' salary for each year of service following the first five years.

In all cases, the total gratuity shall not exceed salary of two years.

b) The following tables set out the status of the Gratuity plan as at March 31, 2025:

The Company has recognised following amounts in the Balance Sheet:

5. Employee Stock Option Scheme (ESOS)
(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding Company then. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme. There are no options outstanding or exercisable for ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 as of March 31, 2025 and as of March 31, 2024.

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme, ESOS 2017, ESOS 2018, ESOS 2019, ESOS 2022 and ESOS 2024 schemes. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016

schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017, ESOS 2018, ESOS 2019, ESOS 2022 and ESOS 2024 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme. There are no options outstanding or exercisable for ESOS 2014 and ESOS 2015 as of March 31, 2025 and as of March 31, 2024.

(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees. The intrinsic value of the options issued under the above referred schemes is 'Nil' as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognised in the books. Had the Company followed the fair value method for valuing its options, the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to ' 5,205 Lakh (Previous year ended March 31, 2024'8,167 Lakh) and the profit after tax would have been lower by ' 3,283 Lakh (Previous year ended March 31, 2024'5,042 Lakh). Consequently, Company's basic and diluted earnings per share would have been ' 8.22 and ' 8.22 respectively (Previous year: ' 7.06 and ' 7.06 respectively).

(iv) Exercise Period under the various ESOS:

The Company's shares were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012, ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever is later subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the Company's shares, vested options under all ESOS schemes are required to be exercised by the employees within five years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee.

*Volatility of share price of a matured enterprise in the industry which is listed on BSE Limited till the date of listing and volatility of share price of the Company from the date of listing have been used as a basis for estimation of expected volatility of options. In the case of ESOS 2016, the expected volatility has been assumed at the rate of 10% since the company was unlisted as on the date of the grant.

6. Managerial remuneration
The appointment and remuneration of managerial personnel is in accordance with the requirements of Section 34A of the Insurance Act, 1938 as amended from time to time including the amendment brought by the Insurance Laws (Amendment) Act, 2015 and has been approved by the IRDAI.

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (as) 15 (Revised), "Employee Benefits", that are determined on an overall Company basis. Further, the managerial remuneration mentioned above includes provision for Variable Performance Pay which is net of true up/true down of provisions of the earlier year. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholder's Profit and Loss Account.

Information required under the qualitative disclosures as per the Guidelines on Remuneration of Directors and Key Managerial Persons of Insurers, prescribed by IRDAI have been furnished in the Directors' report forming part of the annual report.

I nformation required under the Quantitative disclosures is disclosed in Annexure 1. There is no deferred remuneration of MD/CEO/WTD during the year.

7. Remuneration paid to non-whole time independent directors ' 120 Lakh and expense for the year ' 120 Lakh (Previous year ended March 31, 2024 paid '50 Lakh and expense ' 120 Lakh) is included under Schedule 3A under the head "Directors Commission".

10. Leases
In accordance with the Accounting Standard (as) 19, "Leases", the following disclosures are made in respect of operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are ' 14 Lakh (Previous year ended March 31, 2024: ' 26 Lakh).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company's financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for pre-decided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised.

b) The Company has taken properties under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 11,378 Lakh (Previous year ended March 31, 2024: ' 9,233 Lakh).

The lease arrangements contain provisions for renewal and escalation. The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company's financials.

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 64 Lakh (Previous year ended March 31, 2024: ' 74 Lakh).

d) The Company has taken cloud services, networking equipment etc under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are ' 26 Lakh (Previous year ended March 31, 2024: '2 Lakh).

13. Corporate Social Responsibility (CSR)
As per section 135 of the Companies Act, 2013 and amendment rules, the gross amount required to be spent by the Company during the year ended March 31, 2025 is ' 1,397 Lakh (Previous year ended March 31, 2024 '1,530 Lakh). The Company has incurred ' 1,100 Lakh (Previous year ended March 31, 2024: '2,323 Lakh) on various CSR initiatives and balance of ' 297 Lakh has been setted off against excess CSR amounts of previous years.

Unspent amount pertaining to 'other than ongoing projects' transferred to any fund included in Schedule VII of the Companies Act 2013 is 'Nil (Previous year ended March 31, 2024 ' Nil)

Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2025 is ' Nil (Previous year ended March 31, 2024 ' Nil)

14. Borrowings
During the year ended March 31, 2025, the Company had issued unsecured, subordinated, fully-paid, rated, listed, redeemable non-convertible debentures (NCDs) in the nature of 'Subordinated Debt' as per the IRDAI (Registration, Capital Structure, Transfer of Shares and Amalgamation of Insurers) Regulations, 2024 amounting to ' 100,000 Lakh at a coupon rate of 8.05% per annum and subsequently ' 100,000 Lakh at a coupon rate of 8.10% per annum. The said NCDs were allotted on October 09, 2024 and February 14, 2025 and are redeemable at the end of 10 years from the date of allotment with a call option to the Company to redeem the NCDs post the completion of 5 years from the date of allotment and annually thereafter.

As on the reporting date i.e March 31, 2025, the Company has following instances of issuances of nonconvertible debentures (NCDs) aggregating to ' 2,95,000 Lakh as per the below terms of borrowings:

15. Derivative contracts:
I n accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 ('the IRDAI circular on Interest Rate Derivatives') and Master Circular on Actuarial, Finance and Investment Functions of Insurers dated May 17, 2024, allowed insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

a) The Company has during the year, as part of its Hedging strategy, entered into interest rate derivative transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI circular on Interest Rate Derivatives.

Forward Rate Agreement (FRA) derivative contracts are over-the-counter (OTC) transactions and Interest Rate Future (IRF) are exchange trade standard contracts, agreeing to buy notional value of a debt security or Government Bond (GOI) at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

The Forward Rate Agreement (FRA) contract is valued at the difference between the market value of underlying bond at the spot reference yield taken from the SEBI approved rating agency and present value of contracted forward price of underlying bond including present value of intermediate coupon inflows from valuation date till FRA contract settlement date, at applicable INR-OIS rate curve.

The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing settlement prices published by primary stock exchange.

An amount of ' 10,814 Lakh (Previous year ' (17,196) Lakh) was recognized in Revenue Account being the portion of gain/(loss) determined basis the hedge accounting.

Amount that was removed from Hedge Reserve account during the year ended March 31, 2025 in respect of forecast transaction for which hedge accounting had previously been used, but is no longer expected to occur is ' NIL (Previous year ' Nil).

The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy liabilities and will accordingly flow to the Revenue Account.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:
Overview of business and processes:

a) Fixed Income Derivative Hedging instruments:

Derivatives are financial instruments whose characteristics are derived from the underlying assets, or from interest and exchange rates or indices. These include forward rate agreements, interest rate swaps and interest rate futures.

The Company during the financial year has entered into permitted fixed income derivative instrument to minimize exposure to fluctuations in interest rates on plan assets and liabilities. This hedge is carried in accordance with its established policies, goals and applicable regulations. The Company does not engage in derivative transactions for speculative purposes.

b) Derivative policy/process and Hedge effectiveness assessment:

The Company has well defined Board approved Derivative Policy and Process document setting out the strategic objectives, regulatory and operational framework and risks associated with interest rate derivatives along with having measurement, monitoring processes and controls thereof. The accounting policy has been clearly laid out for ensuring a process of periodic effectiveness assessment and accounting.

The Company has clearly identified roles and responsibilities to ensure independence and accountability through the investment decision, trade execution, to settlement, accounting and periodic reporting and audit of the Interest Rate Derivative exposures. The overall policy, risk management framework for the Interest Rate Derivatives are monitored by the Risk Management Committee.

c) Scope and nature of risk identification, risk measurement, and risk monitoring:

The Derivative and related Policies as approved by the Board sets appropriate market limits such as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.

All financial risks of the derivative portfolio are measured and monitored on periodic basis. Quantitative disclosure on risk exposure in Forward Rate Agreement

A hedge is deemed effective, if it has a high statistical correlation between the change in value of the hedged item and the hedging instrument (FRA/IRF). Gains or losses arising from hedge ineffectiveness, if any, are recognized in the Revenue Account.

The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged asset/liability.

The industry exposure limit for FRA exposure has been calculated on the basis of Credit Equivalent

Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the

CEM is the sum of

a) the current credit exposure (gross positive mark to market value of the contract); and

b) potential future credit exposure which is a product of the notional principal amount across the outstanding contract and a factor that is based on the mandated credit conversion factors as prescribed under the IRDAI circular on Interest Rate Derivatives, which is applied on the residual maturity of the contract.

18. Investment property
As mandated under IRDAI circular IRDAI/CIR/F&I/INV/056/03/2016-17 investment in Real Estate Investment Trusts (REIT) of ' 164,313 Lakh (Previous year ended March 31, 2024'115,631 Lakh) has been disclosed as part of the Investment Property under 'Long term investments' in Schedule 8A (Policyholders' Investments)

21. Claims outstanding
As at March 31, 2025, there were 144 claims amounting to ' 1,836 Lakh (Previous year ended March 31, 2024: 4235 claims amounting to ' 3,185 Lakh) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

22. Provision for NPA (non standard assets) for debt portfolio
Provision for doubtful debts is made In line with the 'Guidelines on Prudential norms for income recognition, Asset classification, Provisioning and other related matters in respect of Debt portfolio' as specified by IRDAI vide the Master Circular on Actuarial, Finance and Investment Functions of Insurers dated May 17, 2024, as amended from time to time, and has been recognized in the Profit and Loss account (Shareholders' Fund) and Revenue Account (Policyholders' Fund), as per below table:

During the year ended March 31, 2025 the company has not recognized any additional NPA provision on investment in debt securities. During the year company has recovered ' 72 Lakh and ' 272 Lakh from issuer (IL&FS Ltd and IL&FS Financial Services Ltd) in Shareholders' Fund and Policyholders' Fund respectively, towards partial repayment of principal amount due on NCDs.

I n addition to above, during the year the company has also received 1,62,759 units (FV ' 163 Lakh) and 1,037,241 units (FV ' 1,037 Lakh) of Roadstar Infrastructure Investment Trust (iNVITs) in Shareholders' Fund and Policyholders' Fund respectively, as part of resolution framework of IL&FS group, towards partial repayment of principal amount due on IL&FS group NCDs. The said units of INVITs are listed on stock exchange, however there were NIL trades on the stock exchange since listing and hence fair price could not be arrived in the absence of active market. Considering illiquid status of the such INVIT asset which is still awaiting price discovery the company has not reversed NPA provision towards IL&FS group NCDs. The provision to that extent has been reclassified and shown as part of impairment provision on INVIT units received as resolution framework with no impact in Revenue account and profit and loss account.

' 375 Lakh NPA provision on investment in NCDs of IL&FS Group Companies recognized in revenue account, which is a reclassification due to maturity of bonds in unit linked funds with corresponding impact of reversal in Fair value change account, and hence have neutral impact in Revenue account.

23. Segmental reporting
As per Accounting Standard (as) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 2.

24. Policyholders' surplus
The surplus arising in the non-participating funds amounting to ' 58,771 Lakh (Previous year ended March 31, 2024: '37,881 Lakh) has been transferred to Profit and Loss account based on the recommendation by the Appointed Actuary.

The above contribution is subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the Shareholders.

26. Unit Linked Funds
The Company has presented the financial statements of the unit linked funds in Annexure 3 and 4 as required by the Master Circular.

27. The Micro, Small and Medium Enterprises Development Act, 2006
According to information available with the management, on the basis of intimation received from suppliers, regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the details of amounts due to Micro and Small Enterprises under the said Act as on March 31, 2025 are as

28. Earnings per equity share
Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for effects of all dilutive equity shares.

29. Subsidiaries:
The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Fund Management Limited (formerly HDFC Pension Management Company Limited) ("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for distribution of NPS and servicing to public at large since February 2019. It was granted license under the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated 30th March, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred pension fund manager and its Assets Under Management have grown to ' 115,627 crores as at March 31, 2025 (as at March 31, 2024'76,955 crores).

ii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration number 2067. The Company has been designated as a Private Company under the Companies Law, DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East & North Africa ("MENA") region and India. The Company has been granted the Certificate of Registration to set up overseas Branch in GIFT City, IFSC (regulated by the IFSCA) for conduct of life and health insurance classes of business and has started operations in GIFT City in August 2023.

HDFC International Life & Re was assigned a long-term insurer public financial strength rating of "BBB" with a stable outlook by S&P Global Ratings in December 2018. Subsequently every year S&P Global Ratings confirmed the long-term insurer public financial strength rating of the Company, while maintaining 'Stable outlook'. In October 2022, S&P Global Ratings confirmed the long-term insurer Financial Strength Rating (FSR) of the Company, while changing the outlook as "Negative". In November 2023, S&P Global Ratings confirmed the long-term insurer Financial Strength Rating (FSR) of the Company, while maintaining the outlook as "Negative".In October 2024, S&P Global Ratings confirmed the long-term insurer Financial Strength Rating (FSR) of the Company, while changing the outlook as "Stable". In addition, AM Best Ratings has assigned the Company a long-term insurer Financial Strength Rating (FSR) as "B++ (Good)".

30. Final Dividend
The Board of Directors have recommended a final dividend of ' 2.10 per equity share of face value of ' 10 each in its board meeting held on April 17, 2025, subject to Shareholders approval in the Annual General Meeting.

31. During the year ended March 31, 2025, the Company had transactions with related parties, which have been identified by the management as per the requirements of the Accounting Standard (as) 18, "Related Party Disclosures". Details of these related parties, nature of the relationship, transactions entered into with them and the balances in related party accounts at year end are as mentioned below:

34. Share application money received pending allotment of shares amounting to ' 64 Lakh (Previous year ' Nil) disclosed in the Balance Sheet as on March 31, 2025 relates to the application money received towards Employee Stock Option Plans under Company's Employee Stock Options Scheme(s).

35. The Company claims credit of Goods and Services Tax ('GST') on input services, which is set off against GST on output services. The unutilised credits towards GST on input services are carried forward under 'Schedule 12 -Advances and Other Assets' in the Balance Sheet.

2. Deposits made under local laws
The Company has no deposit (Previous year ended March 31, 2024: ' Nil) made under local laws or otherwise encumbered in or outside India as of March 31, 2025, except investments and deposits detailed in Note 16 of Schedule 16(b).

IRDAI has issued Insurance Regulatory and Development Authority of India (Rural, Social Sector and Motor Third Party Obligations) Regulations, 2024 dated March 28, 2024. This regulation came into force from April 1, 2024. The company is separately tracking the obligatory part w.r.t. new regulation.

4. Allocation of investments and investment income
The underlying investments held on behalf of the shareholders and the policyholders are included in Schedules 8, 8A and 8B. The investment income arising from the investments held on behalf of shareholders has been taken to the Profit and Loss Account and those held on behalf of policyholders to the Revenue Account.

8. Impairment of investments
I n accordance with the Financial Statements Regulations, Schedule A Part I on Accounting Principle for Preparation of Financial Statements on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2025 and accordingly impairment provisions have been provided as below.

Listed equity shares / Infrastructure Investment Trusts (iNVITs)
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head "Provision for diminution in the value of investments" and corresspondingly, Policyholders' and Shareholders' Fair Value Change Account under Policyholders' and Shareholders' Funds respectively in the Balance Sheet have been adjusted for such (reversal)/provision of impairment loss, the details of which are given below:

During the year the company has also received 1,62,759 units (FV ' 163 Lakh) and 1,037,241 units (FV ' 1,037 Lakh) of Roadstar Infrastructure Investment Trust (INVITs) in Shareholders' Fund and Policyholders' Fund respectively, as part of resolution framework of IL&FS group, towards partial repayment of principal amount due on IL&FS group NCDs. The said units of INVITs are listed on stock exchange, however there were NIL trades on the stock exchange since listing and hence fair price could not be arrived in the absence of active market. Considering illiquid status of the such INVIT asset which is still awaiting price discovery the company has not reversed NPA provision towards IL&FS group NCDs. The provision to that extent has been reclassified and shown as part of impairment provision on INVIT units received as resolution framework.

Unlisted Equity Shares
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head "Provision for diminution in the value of investments" and corresspondingly, Other than Approved Investments under Schedule 8A (Policyholders' Investments) and Schedule 8 (Shareholders' Investments) respectively have been adjusted for such diminuton, the details of which are been given below:

Security Receipts and Venture Fund
A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head "Provision for diminution in the value of investments" and corresspondingly, Other than Approved Investments under Schedule 8A (Policyholders' Investments) and Schedule 8 (Shareholders' Investments) respectively have been adjusted for such diminuton, the details of which are been given below:

17. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2025 as a business day. NAV for all unit linked segments were declared on March 31, 2025. All applications received till 3 PM on March 31, 2025, were processed with NAV of March 31, 2025. Applications received after this cut-off for unit linked funds are taken into the next financial year.

18. Long term contracts
The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as required under any law/accounting standard for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

For insurance contracts, actuarial valuation of liabilities for policies in force is done by the Appointed Actuary of the Company. The assumptions used in valuation of liabilities for policies in force are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the IRDAI.

19. IND AS Implementation
Based on the Regulator's email dated 10th October 2024, the Company was identified under phase 1 to implement IndAS from April 1, 2027, onwards. Accordingly, the Company has identified technology system partner and key accounting/ actuarial knowledge partners to assist on the IndAS project implementation. The Company is in the final stages of onboarding such partners. The Company's steering committee is closely monitoring the progress of the implementation and is working towards achieving timelines set by the Regulator. The Audit Committee and Board of Directors are regularly updated on the project.

During the current year, the Regulator has further set expectation to provide proforma financials for FY 2024 with limited review by Independent audit and actuarial firms. The Company is in the process of preparing such proforma financials and then getting it reviewed by Independent audit/ actuarial firms.

20. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or any other person or entities, including foreign entities ('Intermediaries') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficiaries). The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of the Funding Party ('Ultimate Beneficiaries') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Mar 31, 2024

18. Provisions, contingent liabilities and contingent assets

Provisions are accounted for in respect of present obligations arising out of past events where it is probable that an outflow of resources will be required to settle the obligation and the amounts of which can be reliably estimated. Provisions are determined on the basis of best estimate of the outflow of economic benefits required to settle the obligation at the Balance Sheet date. Where no reliable estimate can be made, a disclosure is made as contingent liability. Contingent liabilities are disclosed in respect of;

a) possible obligations arising out of past events, but their existence or otherwise would be confirmed by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company or

b) Present obligations that arise from past events, where it is probable but not likely that an outflow of resources embodying economic benefits will be required to settle the obligations or a reliable estimate of the amounts of the obligations cannot be made.

Where there is a possible obligation or a present obligation where the likelihood of outflow of resources is remote, neither provision is recognised nor disclosure is made.

Contingent assets are neither accounted for nor disclosed.

19. Leases

A) Finance leases

Leases under which the lessee assumes substantially all the risk and rewards of ownership of the asset are classified as finance leases. Such leased asset acquired are capitalised at fair value of the asset or present value of the minimum lease rental payments at the inception of the lease, whichever is lower.

B) Operating leases

Leases where the lessor effectively retains substantially all the risk and the benefits of ownership over the lease term are classified as operating leases. Leased rental payments under operating leases including committed increase in rentals are accounted for as an expense, on a straight line basis, over the non-cancellable lease period.

20. Taxation:

A) Direct tax

I) Provision for income tax

Provision for income tax is made in accordance with the provisions of Section 44 of the Income Tax Act, 1961 read with Rules contained in the First Schedule and other relevant provisions of the Income Tax Act,

1961 as applicable to a Company carrying on life insurance business.

II) Deferred tax

In accordance with the provisions of the Accounting Standard (AS) 22, "Accounting for Taxes on Income", with respect to the carry forward of losses under the Income Tax regulations, the deferred tax asset is recognised only to the extent that there is a virtual certainty supported by convincing evidence that future taxable income will be available against which the deferred tax asset can be realised.

B) Indirect tax

The Company claims credit of Goods and Services Tax on input services, which is set off against Goods and Services Tax on output services. Unutilised credits, if any, are carried forward under "Advances and other assets "for future set off and are deferred for recognition to the extent there is reasonable certainty that the assets can be realised in future.

21. Earnings per share

For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Potential equity shares are treated as dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.

22. Cash and cash equivalents

Cash and cash equivalents for the purposes of Receipts and Payments Account comprise of cash and cheques in hand, bank balances, fixed deposits with original maturity of three months or less, Reverse Repo, highly liquid mutual funds and highly liquid investments that are readily convertible into measurable amounts of cash and which are subject to insignificant risk of change in value. Receipts and Payments Account is prepared and reported using the Direct Method in accordance with Accounting Standard (AS) 3, "Cash Flow Statements" as per requirements of Para 2.2 of the Master Circular.

''''The contingent liability denominated in foreign currency at the balance sheet date is disclosed by using the closing rate. #Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/assessment orders received by the Company from the respective tax Authorities. The Company has filed / in the process of filing appeals against the demand notices/assessment orders with the appellate authorities and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard.

During the quarterended June 30,2023, the Company had received a show cause cum demand notice (SCN) of'' 9,421,846 thousands from the Directorate General of GST Intelligence (''Authority'') pertaining to the period July 2017 to FY 2022 on account of disputed input tax credit (ITC) availed and utilised by the Company in respect of certain services. The Company had also deposited'' 2,500,000 thousands under protest with the Authority in this matter. On January 5,2024, the Company has submitted its detailed response to the SCN with the Adjudicating Authority, contesting the issues raised in the SCN. The Company continues to disclose the said amount as contingent liability.

During the quarter ended March 31, 2024, the Company has received an assessment order passed under section 143(3) of the Income-tax Act, 1961, for FY 2019-20. The addition/disallowance pertaining to certain expenses resulting in post rectification aggregate demand of'' 887,895 thousands (tax demand of'' 612,571 thousands along with interest of'' 275,324 thousands) has been disclosed as Contingent Liability. The tax demand as per the assessment order was erroneously computed at the corporate rate of tax instead of the applicable tax rate for life insurance companies under section 115B of the Income tax Act, 1961. While the Company has filed a rectification application, it awaits the Rectification Order.

**The company had received demand notice from Employees Provident Fund Organization (EPFO) claiming damages and interest and subsequently the final orders from EPFO totaling '' 13,840 thousands. The Company has paid damages and interest totaling '' 13,840 thousands during the year.

2. Pending litigations

The Company''s pending litigations other than those arising in the ordinary course of insurance business comprise of claims against the Company primarily on account of proceedings pending with Tax authorities and Claims, under policies, not acknowledged as debts (net of reinsurance). The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities as applicable, in note 1 of Schedule 16 (B). The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial statements as at March 31, 2024.

3. Actuarial assumptions

The policyholders'' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

a) Interest rate assumptions:

The valuation rate of interest is determined based on the expected return on existing assets, current asset mix, expected investment return on the future investment taking into consideration the asset classes mix and expected future asset mix. The interest rates used for the valuation vary according to the type and term of the product & status of policy and are presented in the table below.

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality (2012-14) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant''s Mortality Table (2012-15).

d) Morbidity assumptions:

Morbidity assumptions are set in accordance with Clause 5(3) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published CIBT 93 Table and are based on the latest experience analysis of the business.

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:

If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period, then there could be a strain in the policyholder fund on account of the amount payable on free-look cancellation, to the extent the amount is higher than reserves held for that policy. In order to avoid the future valuation strain as a result of the free-look cancellations, reserves on account of the above are held. The free-look reserve is calculated as total strain for all policies that are eligible for free-look cancellations at the valuation date, multiplied by a factor, representing the expected assumptions for free-look cancellations.

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (for the year ended March 31, 2023: 14.56% p.a.).

4. Employee benefits A) Defined contribution plans:

During the year, the Company has recognised below amount in the Revenue Account under defined contributions plans.

Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

II. Basis used to determine the overall expected return:

Expected rate of return on investments of the Gratuity plan is determined based on the assessment made by the Company (Trust) at the beginning of the year on the return expected on its existing portfolio, along with the return on estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on suitable mark-up over benchmark Government Securities of similar maturities.

5. Employee Stock Option Scheme (ESOS)

(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding Company then. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme. There are no options outstanding or exercisable for ESOS 2005, ESOS 2010 and ESOS 2011 as of March 31, 2024 and as of March 31, 2023.

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme, ESOS 2017, ESOS 2018, ESOS 2019 and ESOS 2022 schemes. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017, ESOS 2018, ESOS 2019 and ESOS 2022 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees. The intrinsic value of the options issued under the above referred schemes is ''Nil'' as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognised in the books. Had the Company followed the fair value method for valuing its options, the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to '' 816,721 thousands (Previous year ended March 31, 2023''493,610 thousands) and the profit after tax would have been lower by '' 504,245 thousands (Previous year ended March 31, 2023''291,605 thousands). Consequently, Company''s basic and diluted earnings per share would have been '' 7.06 and '' 7.06 respectively (Previous year: '' 6.24 and '' 6.24 respectively).

(iv) Exercise Period under the various ESOS:

The Company''s shares were listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012, ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever is later subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the Company''s shares, vested options under all ESOS schemes are required to be exercised by the employees within five years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee.

Salient features of all the existing grants under the various schemes are as stated below:

A) ESOS 2014

There were two grants issued on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2024 are 15,034,250 (Previous year ended March 31, 2023: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2024 is Nil years (Previous year ended March 31, 2023: Nil years).

A summary of status of ESOS 2014 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

B) ESOS 2015

There were two grants issued on October 1, 2015 and November 1, 2015. The total number of options granted till March 31, 2024 are 9,733,300 (Previous year ended March 31, 2023: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2024 is Nil years (Previous year ended March 31, 2023: Nil years).

There was one grant issued on September 19, 2019, one grant issued on October 19, 2020, one grant issued on March 17, 2021, one grant issued on October 22, 2021 and one grant issued on March 15, 2022 as of March 31, 2024. The total number of options granted till March 31, 2024 are 8,621,108 (Previous year ended March 31, 2023: 8,621,108 ). The weighted average remaining contractual life of the options outstanding as at March 31, 2024 is 2.58 years (Previous year ended March 31, 2023: 3.51 years).

A summary of status of ESOS 2019 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price at the different grant dates is as given below:

There was one grant issued on October 20, 2022 and one grant issued on January 20, 2023 as of March 31, 2023. The total number of options granted till March 31, 2024 are 490,000 (Previous year ended March 31, 2023: 490,000). The weighted average remaining contractual life of the options outstanding as at March 31, 2024 is 7.86 years (Previous year ended March 31, 2023: 8.86 years).

A summary of status of ESOS 2022 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price at the different grant dates is as given below:

10. Leases

I n accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are '' 2,638 thousands (Previous year ended March 31, 2023: '' 5,320 thousands).

13. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013 and amendment rules, the gross amount required to be spent by the Company during the year ended March 31, 2024 is '' 1,53,001 thousands (Previous year ended March 31, 2023 '' 156,374 thousands). The Company has incurred '' 2,32,251 thousands (Previous year ended March 31, 2023: '' 195,340 thousands) on various CSR initiatives.

15. Derivative contracts:

In accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 (''the IRDAI circular on Interest Rate Derivatives'') and IRDAI Investment Master Circular (as revised in Oct 2022) allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

a) The Company has during the year, as part of its Hedging strategy, entered into Forward Rate Agreements (FRA) and Interest Rate Futures (IRF) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI circular on Interest Rate Derivatives.

FRA derivative contracts are over-the-counter (OTC) transactions and IRF are exchange trade standard contracts, agreeing to buy notional value of a debt security or Government Bond (GOI) at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing settlement prices published by primary stock exchange.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:

Overview of business and processes:

a) Fixed Income Derivative Hedging instruments:

The Company during the financial year has entered into FRA and IRF derivative instrument to minimise exposure to fluctuations in interest rates on plan assets and liabilities. This hedge is carried in accordance with its established policies, goals and applicable regulations. The Company does not engage in derivative transactions for speculative purposes.

b) Derivative policy/process and Hedge effectiveness assessment:

21. Claims outstanding

As at March 31, 2024, there were 4,235 claims amounting to '' 318,529 thousands (Previous year ended March 31, 2023: 5,654 claims amounting to '' 494,677 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

22. Provision for NPA (non standard and doubtful assets) for debt portfolio

30. Subsidiaries:

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited ("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for distribution of NPS and servicing to public at large since February 2019 . It was granted license under the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated 30^th March, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred pension fund manager and its Assets Under Management have grown to '' 76,955 crores as at March 31, 2024 (as at March 31, 2023''45,397 crores).

ii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration number 2067. The Company has been designated as a Private Company under the Companies Law, DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by the Dubai Financial Services Authority (""DFSA"") and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East & North Africa ("MENA") region and India. The Company has been granted the Certificate of Registration to set up overseas Branch in GIFT City, IFSC (regulated by the IFSCA) for conduct of life and health insurance classes of business and has started operations in GIFT City in August 2023.

18. Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as required under any law/ accounting standard for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

19. IND AS Implementation

The Company had set up a steering committee comprising members from finance, actuarial and technology. The steering committee met at regular intervals to initiate implementation of IND AS standards. The Company has appointed an external partner to perform an initial impact assessment. The outcome of the Initial impact assessment was submitted to IRDAI within situpalated timelines. The Company is in the process of evaluating a technology partner. The Audit Committee and Board of Directors have been updated regularly in this matters.

20. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or any other person or entities, including foreign entities (''Intermediaries'') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficiaries). The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Mar 31, 2023

1. Contingent liabilities
			('' ''000)
Sr No	Particulars	As at March 31, 2023	As at March 31, 2022
a)	Partly paid-up investments	7,259,393	9,400,641
b)	Claims, other than against policies, not acknowledged as debts by the Company*	-	50
c)	Underwriting commitments outstanding	-	-
d)	Guarantees given by or on behalf of the Company	7,178	3,528
e)	Statutory demands and liabilities in dispute, not provided for#	1,338,172	1,011,886
f)	Reinsurance obligations to the extent not provided for in accounts	-	-
g)	Others
	Statutory demands and liabilities in dispute, not provided for relating to PF**	13,840	-
	Claims, under policies, not acknowledged as debts (net of reinsurance)	465,288	407,252
	Total	9,083,871	10,823,357

*Cases relating to claims, other than against policies, not acknowledged as debts pertain to litigation pending with various appellate forums/courts #Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/assessment orders received by the Company from the respective tax Authorities. The Company has filed appeals against the demand notices/assessment orders with the appellate authorities and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard.

**The company has received demand notice from Employees Provident Fund Organization (EPFO) claiming damages and interest and subsequentlythe final orders from EPFO totaling '' 13,840 thousands. The Company is evaluating the legal options including filing appeal in the Tribunal. The Company does not expect any liability to arise in this regard.

2. Pending litigations

3. Actuarial assumptions

The policyholders'' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency, and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality (201214) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant''s Mortality Table (2012-15).

d) Morbidity assumptions:

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (for the year ended March 31, 2022: 14.56% p.a.).

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

e) Actual return on plan assets of the Gratuity plan is a gain of '' 48,336 thousands (Previous year ended March 31, 2022 gain of '' 49,837 thousands).

f) The Company expects to fund '' 275,989 thousands (Previous year ended March 31, 2022''84,038 thousands) towards the Company''s Gratuity plan during FY 2023-24.

II. Basis used to determine the overall expected return:

5. Employee Stock Option Scheme (ESOS)

(ii) The Company has also granted options to its employees under the ESOS 2014, ESOS 2015, ESOS

2016, ESOS 2017, ESOS 2018, ESOS 2019 and ESOS 2022 schemes. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS

2017, ESOS 2018, ESOS 2019 and ESOS 2022 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to '' 493,610, thousands (Previous year ended March 31, 2022''2,26,406 thousands) and the profit after tax would have been lower by '' 291,605 thousands (Previous year ended March 31, 2022 '' 1,31,965 thousands). Consequently, Company''s basic and diluted earnings per share would have been '' 6.24 and '' 6.24 respectively (Previous year: ''5.84 and '' 5.84 respectively).

(iv) Exercise Period under the various ESOS:

Salient features of all the existing grants under the various schemes are as stated below:

A) ESOS 2012

There were two grants issued on October 1, 2012 and October 1, 2013. The total number of options granted upto March 31, 2023 are 14,275,310 (Previous year ended March 31, 2022: 14,275,310). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years. (Previous year ended March 31, 2022: Nil years).

A summary of status of ESOS 2012 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

There were two grants issued on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2023 are 15,034,250 (Previous year ended March 31, 2022: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years (Previous year ended March 31, 2022: 0.84 years).

C) ESOS 2015

There were two grants issued on October 1, 2015 and November 1, 2015. The total number of options granted till March 31, 2023 are 9,733,300 (Previous year ended March 31, 2022: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is Nil years (Previous year ended March 31, 2022: 1.30 years).

There were two grants issued on October 1, 2016 and November 1, 2016. The total number of options granted till March 31, 2023 are 3,836,850 (Previous year ended March 31, 2022: 3,836,850). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 0.74 years (Previous year ended March 31, 2022: 1.96 years)

E) ESOS 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2023 are 3,069,206 (Previous year ended March 31, 2022: 3,069,206). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 2.41 years. (Previous year ended March 31, 2022: 3.21 years).

F) ESOS (Trust) 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2023 are 536,394 (Previous year ended March 31, 2022: 536,394). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 2.24 years. (Previous year ended March 31, 2022: 3.24 years).

A summary of status of ESOS (Trust) 2017 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

ii For employees being on the payroll of the Company for less than 12 months on date of grant

There was one grant issued on September 19, 2019 and one grant issued on October 22, 2021. The total number of options granted till March 31, 2023 are 672,899 (Previous year ended March 31, 2022: 672,889). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 5.26 years. (Previous year ended March 31, 2022: 6.26 years).

I) ESOS 2022

i For employees being on the payroll of the Company for more than 12 months on date of grant

There was one grant issued on October 20, 2022 and one grant issued on January 20, 2023 as of March 31, 2023. The total number of options granted till March 31, 2023 are 11,049,368 (Previous year ended March 31, 2022: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 6.68 years (Previous year ended March 31, 2022: Nil).

J) ESOS 2022

i For employees being on the payroll of the Company for less than 12 months on date of grant

There was one grant issued on October 20, 2022 and one grant issued on January 20, 2023 as of March 31, 2023. The total number of options granted till March 31, 2023 are 490,000 (Previous year ended March 31, 2022: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2023 is 8.86 years (Previous year ended March 31, 2022: Nil).

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits", that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholder''s Profit and Loss Account.

7. Remuneration paid to non-whole time independent directors '' 5,000 thousands and expense for the year '' 5000 thousands (Previous year ended March 31, 2022 paid ''6,000 thousands and expense '' 5,333 thousands) is included under Schedule 3A under the head "Directors Commission".

10. Leases

I n accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of

operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are '' 5,320 thousands (Previous year ended March 31, 2022: ''139 thousands).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company''s financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for pre-decided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised.

b) The Company has taken properties under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 917,133 thousands (Previous year ended March 31, 2022: '' 637,747 thousands).

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 24,481 thousands (Previous year ended March 31, 2022: '' 9,383 thousands).

d) The Company has taken cloud services, networking equipment etc under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 412,529 thousands (Previous year ended March 31, 2022: ''319,176 thousands).

Unspent amount pertaining to ''other than ongoing projects'' transferred to any fund included in Schedule VII of the Companies Act 2013 is ''Nil (Previous year ended March 31, 2022 '' Nil)

Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2023 is '' Nil (Previous year ended March 31, 2022 '' Nil)

14. During the year ended March 31, 2023, the Company issued unsecured, subordinated, fully-paid, rated, listed, redeemable non-convertible debentures (NCDs) in the nature of ''Subordinated Debt'' as per the IRDAI (Other Forms of Capital) Regulations, 2015 amounting to '' 35,00,000 thousand at a coupon rate of 8.2% per annum. The said NCDs were allotted on June 22, 2022 and are redeemable at the end of 10 years from the date of allotment with a call option to the Company to redeem the NCDs post the completion of 5 years from the date of allotment and annually thereafter.

Interest of '' 621,937 thousands (Previous year ended March 31, 2022:'' 400,200 thousands) on the said NCDs has been charged to the Profit and Loss Account.

15. Derivative contracts:

In accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 (''the IRDAI circular on Interest Rate Derivatives'') and IRDAI Investment Master Circular (as revised in October 2022) allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing settlement prices published by primary stock exchange.

An amount of '' (1,279,721) thousands (Previous year '' (1,319,968) thousands) was recognised in Revenue Account being the portion of loss determined to be ineffective.

Amount that was removed from Hedge Reserve account during the year ended March 31, 2023 in respect of forecast transaction for which hedge accounting had previously been used, but is no longer expected to occur is '' Nil (Previous year '' Nil)

The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy liabilities and will accordingly flow to the Revenue Account.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:

Overview of business and processes:

a) Fixed Income Derivative Hedging instruments:

b) Derivative policy/process and Hedge effectiveness assessment:

c) Scope and nature of risk identification, risk measurement, and risk monitoring:

The Derivative and related Policies as approved by the Board sets appropriate market limits such as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.

All financial risks of the derivative portfolio are measured and monitored on periodic basis.

Quantitative disclosure on risk exposure in Forward Rate Agreement

The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged asset/liability

The industry exposure limit for FRA exposure has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the CEM is the sum of

a) the current credit exposure (gross positive mark to market value of the contract); and

21. Claims outstanding

As at March 31, 2023, there were 5,535 claims amounting to '' 158,352 thousands (Previous year ended March 31, 2022: 856 claims amounting to '' 97,731 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

During the year ended March 31, 2023 the company has recognized NPA provision of '' 75,000 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19 owing to the default of interest and principal payment on the Non-Convertible Debentures (NCD''s) held in Unit Linked Funds. The additional provision is recognized due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neutral impact on Revenue account.

Further, during the year company has recovered '' 6,205 thousand and '' 7,284 thousand from issuer (IL&FS Financial Services Ltd) in Non-Linked Policyholders'' Fund and Shareholders'' Fund respectively, towards part payment of principal amount due on NCDs.

23. Segmental reporting

As per Accounting Standard (AS) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1.

24. Policyholders'' surplus

The surplus arising in the non-participating funds amounting to '' 11,390,975 thousands (Previous year ended March 31, 2022, '' 7,374,476 thousands) has been transferred to Profit and Loss account based on the recommendation by the Appointed Actuary.

The above contribution is subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the Shareholders.

26. Unit Linked Funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular.

29. Acquisition of Exide Life Insurance Company Limited:

On January 1, 2022, the Company had acquired 100% stake in Exide Life Insurance Company Limited (Exide Life or Subsidiary). Subsequent to the acquisition, the Company had filed a Scheme of amalgamation (Scheme) with National Company Law Tribunal (NCLT) to merge Exide Life with HDFC Life.

NCLT vide its order dated September 16, 2022 and the Insurance Regulatory Development Authority of India (IRDAI) vide its approval dated October 13, 2022 (effective from end of day of October 14, 2022) had approved the said Scheme and same was filed with the Registrar of Companies (RoC) on October 14, 2022, post which, Exide Life ceased to exist.

Based on the approved Scheme, the Company has accordingly given effect of the merger in its financial statement as under:

a) The appointed date for the merger was April 1, 2022.

b) The Company in its financial statements, had accounted the merger with effect from April 1, 2022 (the appointed date) using the Pooling of Interest method as prescribed under the Accounting Standard 14 (AS 14).

c) The difference between the share capital of the subsidiary company and value of investment in the subsidiary company by the Company was accounted as amalgamation reserve. The said amalgamation reserve created on merger has been further adjusted against the Share premium Account as per the terms of NCLT order.

Consequently, the comparative previous year is not comparable.

30. Subsidiaries:

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited ("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for distribution of NPS and servicing to public at large since February 2019. It was granted licence under the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated March 30, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred pension fund manager and its Assets Under Management have grown to '' 45,397 crore as at March 31, 2023 (as at March 31, 2022''28,414 crore).

ii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration number 2067. The Company has been designated as a Private Company under the Companies Law, DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by the Dubai Financial Services Authority (""DFSA"") and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East & North Africa ("MENA") region and India.

In December 2018, HDFC International Life & Re was assigned a long-term insurer public financial strength rating of "BBB" with a stable outlook by S&P Global Ratings. In subsequent years also, S&P Global ratings confirmed the long-term insurer public financial strength rating of HDFC International Life & Re while maintaining the outlook as "Stable". In October 2022, S&P Global Ratings confirmed the long-term insurer -Financial Strength Rating (FSR) of the HDFC International Life & Re, while changing the outlook as "Negative".

31. Final Dividend

The Board of Directors have recommended a final dividend of '' 1.90 per equity share of face value of '' 10 each in its

board meeting held on April 26, 2023, subject to Shareholders approval in the Annual General Meeting.

35. Share application money received pending allotment of shares amounting to '' 31,543 thousands (Previous year '' 33,183 thousands) disclosed in the Balance Sheet as on March 31, 2023 relates to the application money received towards Employee Stock Option Plans under Company''s Employee Stock Options Scheme(s).

36. The Company claims credit of Goods and Services Tax (''GST'') on input services, which is set off against GST on output services. The unutilised credits towards GST on input services are carried forward under ''Schedule 12 -Advances and Other Assets'' in the Balance Sheet.

During the year ended March 31, 2023 the company has recognized NPA provision of '' 75,000 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19, owing to the default of interest and principal payment on the Non-Convertible Debentures (NCD''s) held in Unit Linked Funds (Schedule 8B). The additional provision is recognized due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neutral impact on Revenue account.

Owing to proportionate Mark to Market (MTM) impact of '' 61,510 thousands on the matured NCDs during the year, gross NPA has been increased with corresponding adjustment in the Fair value change account.

During the year, The company has recovered '' 6,205 thousands and '' 7,284 thousands from issuer (IL&FS Financial Services Ltd) in Non-Linked Policyholders'' Fund and Shareholders'' Fund respectively, towards part payment of principal amount due on NCDs.

The increase in gross NPA Investment Schedules (viz. Schedule 8, Schedule 8A, Schedule 8B) is primarily attributed towards transfer of assets pursuant to amalgamation of Exide Life Insurance Company Ltd.

2. Deposits made under local laws

The Company has no deposit (Previous year ended March 31, 2022: '' Nil) made under local laws or otherwise encumbered in or outside India as of March 31, 2023, except investments and deposits detailed in Note 16 of Schedule 16(B).

a. The persistency ratios are calculated in accordance with the IRDAI circular no. IRDAI/F&A/CIR/MISC/256/09/2021 dated September 30, 2021 and hence are with a lag of one month.

b. The persistency ratios for the year ended March 31, 2023 have been calculated for the policies issued in the March to February period of the relevant years. For eg: the 13^th month persistency for current year is calculated for the policies issued from March 2021 to February 2022. The persistency ratios for the year ended March 31, 2022 have been calculated in a similar manner.

c. Definition for persistency ratio revised in accordance with IRDAI circular on ''Public Disclosures by Insurers'' dated September 30, 2021; persistency for individual policies; figures for previous period have been restated as per revised definition.

d. Ratios for previous year have been reclassified/regrouped wherever necessary.

Additional Tierl (ATI) Bonds

During the year ended March 31, 2020 the company had recognized Impairment provision, consequent to the RBI''s "Yes Bank Ltd - Reconstruction Scheme 2020" wherein the Bank was directed to write-down certain Basel III Additional Tier1 Bonds (AT1 Bonds) as a part of the reconstruction scheme. An impairment provision of 100% of reporting value, amounting to '' 1,056,419 thousands was made in investment in Yes Bank AT1 Bonds, held in Shareholders Fund. Interest accrual of '' 20,168 thousands on these AT1 Bonds was also reversed in the Revenue Account in Year ending March 31, 2020.

Further during the year ended March 31, 2023 the company had recognized/reversed impairment provision of '' NIL on Additional Tier1 (AT1) Bonds, and '' 6,419 thousands in corresponding previous year ending March 31, 2022. The provision reversal was recognized due to scheduled deemed maturity of bonds with corresponding impact in the loss on sale/redemption of investments in Profit & Loss account, and hence had neutral impact on Profit & Loss Account.

Non-Convertible Debentures (NCD''s)/ Bonds

During the year ended March 31, 2023, the company had recognized/reversed impairment provision of NIL and during the corresponding previous year, basis the Company''s credit evaluation, owing to asset quality improvement in the long term for specified issuers and receipt of maturity proceeds, a reversal of impairment provision of '' 75,000 thousands had been recognized, both in the Profit & Loss Account and Revenue Account for investments held in Shareholders'' and Non-Linked Policyholders'' Funds respectively.

17. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2023 as a business day. NAV for all unit linked segments were declared on March 31, 2023. All applications received till 3 PM on March 31, 2023, were processed with NAV of March 31, 2023. Applications received after this cut-off for unit linked funds are taken into the next financial year.

18. Long term contracts

19. Goods and Services Tax

During the year, Directorate General of Goods and Services Tax Intelligence (DGGI) - Mumbai has initiated an industry wide investigation in relation to Input Tax Credit availed on certain expenses. The Company is providing necessary information and documents to support the department. The Company has not yet received any show cause notice from the department. Upon receipt of the same, the Company will decide on the necessary course of action

20. IND AS Implementation

During the year, the Company has set up a steering committee comprising members from finance, actuarial and technology. The steering committee met at regular intervals to initiate implementation of IND AS standards. Post deliberations, the Company has appointed an external partner to perform an impact assessment. The Company is in the process of aligning its implementation plan with the glide path proposed by IRDAI. The Audit Committee and Board of Directors have been updated regularly in this matter.

21. During the year ended March 31, 2023, the Company has issued 3,57,94,824 equity shares of face value of '' 10 each on a preferential basis to HDFC Limited.

22. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or any other person or entities, including foreign entities (''Intermediaries'') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficieries). The Company has also not received any fund from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

23. Code on Social Security, 2020

The Code on Social Security, 2020 (''Code'') relating to employee benefits during employment and post-employment benefits has been published in the Gazette of India. However, the date on which the Code will come into effect has not been notified.

Mar 31, 2022

1. Contingent liabilities

$During the year ended March 31,2021, the Company had participated under the Vivad Se Vishwas Scheme 2020, for the TDS matters (total demand of'' 70,214 thousands) for which litigation was pending. The Company has received the Discharge Certificates (order for full and final settlement of tax arrear) (total demand of'' 70,214 thousands). Accordingly contingent liability as on March 31,2021, stands reduced by '' 70214 thousands.

The Company has evaluated the Supreme Court Judgment in case of "Vivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengal" and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated February 28, 2019 issued by the Employees'' Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of "basic wages" of the relevant employees for the purposes of determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952. The Company has taken a legal view on the same and will continue to monitor any further developments on this matter. The Company has implemented determining contribution to provident fund under the Employees'' Provident Funds & Miscellaneous Provisions Act, 1952 on certain other allowances which are universally, necessarily and ordinarily paid to all across the board w.e.f. April 2019.

2. Pending litigations

and disclosed the contingent liabilities as applicable, in note 1 of Schedule 16 (B). The Company does not expect the outcome of these proceedings to have a material adverse effect on its financial results at March 31, 2022.

3. Actuarial assumptions

The policyholders'' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency, and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

a) Interest rate assumptions:

b) Expense assumptions:

The expense assumptions are set on the basis of the expense analysis. These are fixed renewal expenses (prescribed below as at March 31, 2022 and March 31, 2021 respectively) and investment expenses charged as a % of fund.

*The fixed expense assumption for Annuity line of business is '' 203. *The fixed expense assumption for Non- Par line of business is '' 120.

Claim expenses assumption is '' 151 per maturity/ surrender claim and '' 2,735 for death claim at March 31, 2022 ('' 143 per maturity/surrender claim and '' 2,580 for death claim as at March 31, 2021). The renewal and claim expenses are increased at an inflation rate of 6.0 % p.a.(for the year ended March 31, 2021: 6.0% p.a)

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives mortality (201214) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the Indian Individual Annuitant''s Mortality Table (2012-15).

d) Morbidity assumptions:

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and

vary according to the premium frequency and type of the product.

f) Provision for free-look period:

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56% p.a. (For the year ended March 31, 2021 14.56% p.a.)

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

b) The following tables sets out the status of the Gratuity plan as at March 31, 2022:

II. Basis used to determine the overall expected return:

5. Employee Stock Option Scheme (ESOS)

the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to '' 2,26,406 thousands (Previous year ended March 31, 2021''5,25,995 thousands) and the profit after tax would have been lower by '' 1,31,965 thousands (Previous year ended March 31, 2021 '' 2,90,839 thousands). Consequently, Company''s basic and diluted earnings per share would have been '' 5.84 and '' 5.84 respectively (Previous year: '' 6.59 and '' 6.58 respectively).

(iv) Exercise Period under the various ESOS:

Salient features of all the existing grants under the various schemes are as stated below:

A) ESOS 2012

There were two grants issued on October 1, 2012 and October 1, 2013. The total number of options granted upto March 31, 2022 are 14,275,310 (Previous year ended March 31, 2021: 14,275,310). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is Nil years. (Previous year ended March 31, 2021: 0.5 years).

A summary of status of ESOS 2012 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme, ESOS 2017, ESOS 2018 and ESOS 2019 schemes. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017, ESOS 2018 and ESOS 2019 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

There were two grants issued on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2022 are 15,034,250 (Previous year ended March 31, 2021: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 0.84 years (Previous year ended March 31, 2021: 1.43 years).

C) ESOS 2015

There were two grants issued on October 1, 2015 and November 1, 2015. The total number of options granted till March 31, 2022 are 9,733,300 (Previous year ended March 31, 2021: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 1.30 years (Previous year ended March 31, 2021: 2.28 years).

There were two grants issued on October 1, 2016 and November 1, 2016. The total number of options granted till March 31, 2022 are 3,836,850 (Previous year ended March 31, 2021: 3,836,850). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 1.96 years (Previous year ended March 31, 2021: 2.96 years)

E) ESOS 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2022 are 3,069,206 (Previous year ended March 31, 2021: 3,069,206). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 3.21 years. (Previous year ended March 31, 2021: 4.16 years).

F) ESOS (Trust) 2017

There was one grant issued on March 14, 2018. The total number of options granted till March 31, 2022 are 536,394 (Previous year ended March 31, 2021: 536,394). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 3.24 years. (Previous year ended March 31, 2021: 4.24 years).

There was one grant issued on October 1, 2018. The total number of options granted till March 31, 2022 are 1,873,353 (Previous year ended March 31, 2021:1,873,353). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 3.99 years. (Previous year ended March 31, 2021: 4.91 years).

H) ESOS 2019

i For employees being on the payroll of the Company for more than 12 months on date of grant

There was one grant issued on September 19, 2019, one grant issued on October 19, 2020, one grant issued on March 17, 2021, one grant issued on October 22, 2021 and one grant issued on March 15, 2022 as of March 31, 2022. The total number of options granted till March 31, 2022 are 8,621,108 (Previous year ended March 31, 2021: 7,844,006). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 5.15 years. (Previous year ended March 31, 2021:5.11 years).

ii For employees being on the payroll of the Company for less than 12 months on date of grant

There was one grant issued on September 19, 2019 and one grant issued on October 22, 2021. The total number of options granted till March 31, 2022 are 672,889 (Previous year ended March 31, 2021: 581,812). The weighted average remaining contractual life of the options outstanding as at March 31, 2022 is 6.26 years. (Previous year ended March 31, 2021: 6.98 years).

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits", that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholder''s Profit and Loss Account.

7. Remuneration paid to non-whole time independent directors '' 6,000 thousands and expense for the year '' 5,333 thousands (Previous year ended March 31, 2021 paid '' 6,500 thousands and expense '' 6,500 thousands) is included under Schedule 3A under the head "Directors Commission".

10. Leases

I n accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of

operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are '' 139 thousands (Previous year ended March 31, 2021: '' 772 thousands).

b) The Company has taken properties under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 637,747 thousands (Previous year ended March 31, 2021: '' 6,03,462 thousands).

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 9,383 thousands (Previous year ended March 31, 2021: '' 9,379 thousands).

d) The Company has taken cloud services, networking equipment etc under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head "Rent, rates and taxes" in the Revenue Account are '' 319,176 thousands (Previous year ended March 31, 2021: '' 2,98,186 thousands).

13. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013 and amendment rules, the gross amount required to be spent by the Company during the year ended March 31, 2022 is '' 173,197 thousands (Previous year ended March 31, 2021 '' 1,56,508 thousands). The Company has incurred '' 130,207 thousands (Previous year ended March 31, 2021: '' 2,00,001 thousands) on various CSR initiatives.

Unspent amount pertaining to ''other than ongoing projects'' transferred to any fund included in Schedule VII of the Companies Act 2013 is '' Nil (Previous year ended March 31, 2021 '' Nil)

Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2022 is '' Nil (Previous year ended March 31, 2021 '' Nil)

14. During the previous year ended March 31, 2021, the Company has issued unsecured, subordinated, fully-paid, rated, listed, redeemable non-convertible debentures (NCDs) in the nature of ''Subordinated Debt'' as per the IRDAI (Other Forms of Capital) Regulations, 2015. The said NCDs were allotted on July 29, 2020 and are redeemable at the end of 10 years from the date of allotment with a call option to the Company to redeem the NCDs post the completion of 5 years from the date of allotment and annually thereafter.

15. Derivative contracts:

In accordance with the IRDAI circular no. IRDA/F&I/INV/CIR/138/06/2014 dated June 11, 2014 (''the IRDAI circular on Interest Rate Derivatives'') and IRDAI Investment Master Circular issued in May 2017 allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

The Interest Rate Futures (IRF) are exchanged traded derivative instrument and valued at closing settlement prices published by primary stock exchange.

An amount of '' (1,319,968) thousands (Previous year '' (1,089,514) thousands) was recognised in Revenue Account being the portion of loss determined to be ineffective.

Amount that was removed from Hedge Reserve account during the year ended March 31, 2022 in respect of forecast transaction for which hedge accounting had previously been used, but is no longer expected to occur is '' Nil (Previous year '' Nil)

The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy liabilities and will accordingly flow to the Revenue Account.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:

Overview of business and processes: a) Fixed Income Derivative Hedging instruments:

b) Derivative policy/process and Hedge effectiveness assessment:

c) Scope and nature of risk identification, risk measurement, and risk monitoring:

The Derivative and related Policies as approved by the Board sets appropriate market limits such as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.

All financial risks of the derivative portfolio are measured and monitored on periodic basis.

Quantitative disclosure on risk exposure in Forward Rate Agreement

The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged asset/liability

The industry exposure limit for FRA exposure has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the CEM is the sum of

a) the current credit exposure (gross positive mark to market value of the contract); and

18. Investment property

As mandated under IRDAI circular IRDAI/CIR/F&I/INV/056/03/2016-17 investment in Real Estate Investment Trusts (REIT) of '' 6,409,060 thousands (Previous year ended March 31, 2021''2,573,912 thousands) has been disclosed as part of the Investment Property under ''Long term investments'' in Schedule 8A (Policyholders'' Investments).

21. Claims outstanding

As at March 31, 2022, there were 856 claims amounting to '' 97,731 thousands (Previous year ended March 31, 2021 1,078 claims amounting to '' 116,298 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

22. Provision for NPA (non standard and doubtful assets) for debt portfolio

Provision for non standard and doubtful debts is made In line with the ''Guidelines on Prudential norms for income recognition, Asset classification, Provisioning and other related matters in respect of Debt portfolio'' as specified by IRDAI vide the Master Circular dated December 11, 2013 and has been recognised in the Revenue Account as per below table:

During the year ended March 31, 2022 the Company has recognised NPA provision of '' 12,500 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19 owing to the default of interest payment on the Non-Convertible Debentures (NCD''s) held in Unit Linked Funds.

The additional provision is recognised due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neurtal impact on Revenue account.

23. Segmental reporting

As per Accounting Standard (AS) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1.

24. Policyholders'' surplus

The surplus arising in the non-participating funds amounting to '' 7,374,476 thousands (Previous year ended March 31, 2021, '' 8,202,718 thousands) has been transferred to Profit and Loss account based on the recommendation by the Appointed Actuary.

26. Unit Linked Funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular.

29. Acquisition of Exide Life Insurance Company Limited:

Consequent to the announcement and shareholders'' approval towards the acquisition of 100% of the share capital of and subsequent merger of Exide Life Insurance Company Limited (Exide Life) into the Company for a total consideration of '' 66,870,000 thousands, the Company has received necessary approvals from the Competition Commission of India (CCI) on November 2, 2021 and IRDAI on December 31, 2021 for the phase I to acquire 100% stake in Exide Life.

Accordingly, the Company has issued 87,022,222 equity shares at an agreed issue price of '' 685 per share, on a preferential basis and balance payout through bank transfer of '' 7,259,778 thousands to Exide Industries Limited towards the settlement of full purchase consideration of '' 66,870,000 thousands onJanuary 1, 2022, thereby making Exide Life, a wholly-owned subsidiary of the Company with effect from January 1, 2022.

As regards second phase of the transaction, the Company has obtained necessary approvals from National Stock Exchange of India Limited (NSE) and BSE Limited (BSE) on April 22, 2022 and is in the process of obtaining approval for the merger scheme from the National Company Law Tribunal (NCLT), post which final approval would be sought from Insurance Regulatory and Development Authority of India.

30. Subsidiaries:

The Company has three subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited ("HDFC Pension") is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013 and also licensed as Point of Presence (PoP) for distribution of NPS and servicing to public at large since February 2019. It was granted licence under the new Request for Proposal (RFP) by the PFRDA and was issued certificate of registration dated March 30, 2021 to act as Pension Fund under NPS architecture. HDFC Pension has been a preferred pension fund manager and its Assets Under Management have grown to '' 28,414 crore as at March 31, 2022 (as at March 31, 2021''16,384 crore).

ii. Exide Life Insurance Company Limited (''Exide Life'') became a wholly owned subsidiary of HDFC Life Insurance Company Limited, post January 1, 2022, when the Company acquired 100% of the share capital of Exide Life from Exide Industries Ltd. Exide Life was incorporated in India on December 13, 2000 and obtained a license from IRDAI dated August 2, 2001 to carry on the business of life insurance and annuity. Exide Life has bouquet of insurance products sold through multiple sales channel with presence across India and its Asset Under Management is '' 19,682 crore as at March 31, 2022.

iii. HDFC International Life and Re Company Limited ("HDFC International Life & Re") is a wholly owned foreign subsidiary incorporated in Dubai International Financial Centre ("DIFC") as a Company Limited by Shares under the previous Companies Law, DIFC Law No.2 of 2009 on January 10, 2016 under registration number 2067. The Company has been designated as a Private Company under the Companies Law, DIFC Law no. 5 of 2018 as on the date of its enactment. HDFC International Life & Re is regulated by the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council ("GCC"), Middle East & North Africa ("MENA") region and India.

31. Final Dividend

The Board of Directors have recommended a final dividend of '' 1.70 per equity share of face value of '' 10 each in its board meeting held on April 26, 2022, subject to Shareholders approval in the Annual General Meeting.

32. During the year ended March 31, 2022, the Company had transactions with related parties, which have been identified by the management as per the requirements of the Accounting Standard (AS) 18, "Related Party Disclosures". Details of these related parties, nature of the relationship, transactions entered into with them and the balances in related party accounts at year end are as mentioned below:

35. Share application money received pending allotment of shares amounting to '' 33,183 thousands (Previous year '' 19,711 thousands) disclosed in the Balance Sheet as on March 31, 2022 relates to the application money received towards Employee Stock Option Plans under Company''s Employee Stock Options Scheme(s).

During the year ended March 31, 2022 the Company has recognised NPA provision of '' 12,500 thousands on investment in NCDs of IL&FS Ltd, classified as NPA in FY 2018-19, owing to the default of interest payment on the Non-Convertible Debentures (NCD''s) held in Unit Linked Funds.

The additional provision is recognised due to maturity of bonds with corresponding impact of reversal in Fair value change account, and hence have neurtal impact on Revenue account.

Owing to proportionate Mark to Market (MTM) impact of '' 12500 thousands on one of the matured IL&FS NCDs during the year, gross NPA has been increased with corresponding adjustment in the Fair value change account.

2. Deposits made under local laws

The Company has no deposit (Previous year ended March 31, 2021: '' Nil) made under local laws or otherwise encumbered in or outside India as of March 31, 2022, except investments and deposits detailed in Note 16 of Schedule 16(B).

4. Allocation of investments and investment income

The underlying investments held on behalf of the shareholders and the policyholders are included in Schedules 8, 8A and 8B. The investment income arising from the investments held on behalf of shareholders has been taken to the Profit and Loss Account and those held on behalf of policyholders to the Revenue Account.

a. The persistency ratios are calculated in accordance with the IRDAI circular no. IRDAI/F&A/CIR/MISC/256/09/2021 dated September 30, 2021 and hence are with a lag of one month.

b. The persistency ratios for the year ended March 31, 2022 have been calculated for the policies issued in the March to February period of the relevant years. For eg: the 13^th month persistency for current year is calculated for the policies issued from March 2020 to February 2021. The persistency ratios for the year ended March 31, 2021 have been calculated in a similar manner.

8. Impairment of investments

In accordance with the Financial Statements Regulations, Schedule A Part I on "Accounting Principle for Preparation of Financial Statements" on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2022 and accordingly impairment provisions have been provided as below.

Listed equity shares

A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head ""Provision for diminution in the value of investments"" and corresspondingly, Policyholders'' and Shareholders'' Fair Value Change Account under Policyholders'' and Shareholders'' Funds respectively in the Balance Sheet have been adjusted for such (reversal)/provision of impairment loss, the details of which are given below:

Additional Tierl (ATI) Bonds

During the year ended March 31, 2022 the company has reversed impairment provision of '' 6,419 thousands on Additional Tier1 (AT1) Bonds, and NIL in corresponding previous year ending March 31, 2021. The provision reversal is recognised due to scheduled deemed maturity of bonds with corresponding impact in the loss on sale/redemption of investments in Profit & Loss account, and hence have neutral impact on Profit & Loss Account.

During the year ended March 31, 2020 the company had recognised Impairment provision, consequent to the RBI''s "Yes Bank Ltd - Reconstruction Scheme 2020" wherein the Bank was directed to write-down certain Basel III Additional Tier1 Bonds (AT1 Bonds) as a part of the reconstruction scheme. An impairment provision of 100% of reporting value, amounting to '' 1,056,419 thousands was made in investment in Yes Bank AT1 Bonds, held in Shareholders Fund. Interest accrual of '' 20,168 thousands on these AT1 Bonds was also reversed in the Revenue Account in Previous Year ending March 31, 2020.

Non-Convertible Debentures (NCD''s)/ Bonds

Basis the Company''s credit evaluation, owing to asset quality improvement in the long term for specified issuers and receipt of maturity proceeds, a reversal impairment provision of '' 75,000 thousands has been recognised, both in the Profit & Loss Account and Revenue Account for investments held in Shareholders'' and Non-Linked Policyholders'' Funds respectively.

Corporate	Strategic	Management Review	Financial	EV Results and
Overview	Report	& Statutory Reports	Statements	Glossary of Terms
> 01-33	34-101	102-200	Â¥ 201-481	482-490

(''in crore)

Particulars

As at

March 31, 2022

Shareholdersâ fund Paid up capital* Reserves & Surpluses Fair value change Borrowings Total(B)

2,115.94

6,556.56

84.80

600.00

As at

March 31, 2021

2,022.92

477.97

207.44

600.00

9,357.30

3,308.33

Misc. expenses not written off Credit / (Debit) from P&L A/c.	6,728.61	5,929.40
Total (C)	6,728.61	5,929.40
Total Shareholders'' funds (B C)	16,085.91	9,237.73
Controlled fund (Total (A B C))	204,160.53	173,065.83
*includes Share Application money
Reconciliation of the Controlled Fund with Revenue and Profit and Loss Account		(''in crore)
Particulars	As at March 31, 2022	As at March 31, 2021
Opening balance of Controlled fund	173,065.83	127,185.45
Add: Inflow
Income	-	-
Premium income	45,962.83	38,583.49
Less: Reinsurance ceded	(566.37)	(461.20)
Net premium	45,396.46	38,122.29
Investment income	18,830.60	35,182.97
Other income	176.54	183.39
Funds transferred from Shareholdersâ Accounts	569.43	258.56
Total income	64,973.03	73,747.21
Less: Outgo
(i) Benefits paid (Net)	30,078.63	21,780.67
(ii) Interim & terminal bonus paid	1,785.12	794.10
(iii) Change in valuation of liability	24,681.53	40,829.63
(iv) Commission	1,940.29	1,710.40
(v) Operating expenses	5,612.47	4,585.97
(vi) Service tax charge on linked charges	369.56	356.75
(vii) Provision for taxation
(a) Fringe Benefit Tax	-	-
(b) Income Tax	184.50	274.39
(viii) Provisions (other than taxation)
(a) Provision for diminution in the value of investment	(255.75)	(190.53)
(b) Others	2.36	1.98
Total Outgo	64,398.70	70,143.36
Surplus of the Policyholders'' fund	574.33	3,603.85
Less: Transferred to Shareholders'' Account	(1,009.34)	(990.90)
Net flow in Policyholdersâ account	(435.01)	2,612.96
Add: Net income in Shareholdersâ fund	1,085.05	1,759.51
Net In Flow / Outflow	650.04	4,372.47
Add: Change in valuation liabilities	24,681.53	40,829.63
Add: Increase in paid up capital	93.02	(1.48)
Add: Borrowings	-	600.00
Less: Dividend and dividend distribution tax	(408.47)	-
Add: Increase in Reserves & Surplus	6,078.59	79.76
Closing balance of Controlled fund	204,160.53	173,065.83
As per Balance Sheet	204,160.53	173,065.83
Difference, if any (Change in Fair Value - B/S)	-	-

17. I n accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2022 as a business day. NAV for all unit linked segments were declared on March 31, 2022. All applications received till 3 PM on March 31, 2022, were processed with NAV of March 31, 2022. Applications received after this cut-off for unit linked funds are taken into the next financial year.

18. Long term contracts

19. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or any other person or entities, including foreign entities (''Intermediaries'') with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lent or invest in party identified by or on behalf of the Company (Ultimate beneficieries). The Company has also not received any find from any parties (Funding Party) with the understanding that the Company shall whether, directly or indirectly lent or invest in other persons or entities identified by or on behalf of the Funding Party (''Ultimate Beneficiaries'') or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

20. Code on Social Security, 2020

21. COVID-19

In light of the COVID-19'' pandemic outbreak, its continuous effect and information available up to the date of approval of these financial statements, the Company has assessed the impact of pandemic on its assets, including valuation and impairment of investments, liabilities including policy liability and solvency position. Based on the evaluation, the Company carries:

(a) Adequate impairment provisions on the investments to an extent necessary and

(b) Excess Mortality Reserve (EMR) of '' 550,000 thousands as at the Balance Sheet date for potential adverse mortality expected due to pandemic. This reserve is over and above the policy level liabilities calculated based on the applicable IRDAI regulations and based on our current expectation of extra claims to be received in the future, both of which are certified by the appointed actuary.

The Company has also assessed its solvency position as at the Balance sheet date and is at 176% which is above the prescribed regulatory limit of 150%. Further, based on the Company''s current assessment of the business operations over next one year, it expects the solvency ratio to continue to remain above the minimum limit prescribed by the Insurance regulator.The impact of the global health pandemic may be different from that estimated as at the date of approval of these financial statements. The Company will continue to closely monitor any material changes to future economic conditions.

Mar 31, 2021

3. Actuarial assumptions

The policyholders'' actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

a) Interest rate assumptions:

2. Pending litigations

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality (201214) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the LIC Annuitants (1996-1998) table.

d) Morbidity assumptions:

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and

vary according to the premium frequency and type of the product.

f) Provision for free-look period:

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56 % p.a. (For the year ended March 31, 2020 14.56% p.a.)

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognised in the Revenue Account.

II. Basis used to determine the overall expected return:

5. Employee Stock Option Scheme (ESOS)

(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding Company. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme. There are no options outstanding and exercisable for ESOS 2005, ESOS 2010 and ESOS 2011 as of March 31, 2021 and as of March 31, 2020.

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme, ESOS 2017, ESOS 2018 and ESOS 2019 scheme. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017, ESOS 2018 and ESOS 2019 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

its options, the charge to the Revenue Account/ Profit & Loss Account for the year would have been aggregated to '' 525,995 thousands (Previous year ended March 31, 2020''483,919 thousands) and the profit after tax would have been lower by '' 290,839 thousands (Previous year ended March 31, 2020 '' 313,174 thousands). Consequently, Company''s basic and diluted earnings per share would have been '' 6.59 and '' 6.58 respectively (Previous year: '' 6.26 and 6.26 respectively).

(iv) Exercise Period under the various ESOS:

Salient features of all the existing grants under the various schemes are as stated below:

A) ESOS 2012

There were two grants issued on October 1, 2012 and October 1, 2013. The total number of options granted upto March 31, 2021 are 14,275,310 (Previous year ended March 31, 2020:

14,275,310). The weighted average remaining contractual life of the options outstanding as at March 31, 2021 is 0.5 years. (Previous year ended March 31, 2020: 1.50 years).

A summary of status of ESOS 2012 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

B) ESOS 2014

There were two grants issued on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2021 are 15,034,250 (Previous year ended March 31, 2020: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2021 is 1.43 years (Previous year ended March 31, 2020: 2.06 years).

C) ESOS 2015

There were two grants issued on October 1, 2015 and November 1, 2015. The total number of options granted till March 31, 2021 are 9,733,300 (Previous year ended March 31, 2020: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2021 is 2.28 years (Previous year ended March 31, 2020: 3.27 years).

A summary of status of ESOS 2015 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

Mar 31, 2019

Corporate Information

HDFC Life Insurance Company Limited (âHDFC Lifeâ or âThe Companyâ) (Formerly HDFC Standard Life Insurance Company Limited), is formed as a joint venture between Housing Development Finance Corporation Limited (âHDFC Limitedâ) and Standard Life Aberdeen plc.

The Company was incorporated at Mumbai on August 14, 2000 as a public limited company under the Companies Act, 1956. The Company obtained a certificate of commencement of business on October 12, 2000 and a certificate of registration from the Insurance Regulatory and Development Authority of India (âIRDAIâ) on October 23, 2000 for carrying on the business of life insurance. The Company offers a range of individual and group insurance solutions. The portfolio comprises of various insurance and investment products such as Protection, Pension, Savings, Investment, Annuity and Health.

The Shares of the Company are listed on National Stock Exchange of India Limited (NSE) and BSE Limited (BSE).

During the year ended March 31, 2019, the name of the Company has been changed from HDFC Standard Life Insurance Company Limited to âHDFC Life Insurance Company Limitedâ upon receipt of fresh Certificate of Incorporation dated January 17, 2019 pursuant change of name, issued by the office of Registrar of Companies, Mumbai.

B. Notes forming part of accounts

1. Contingent liabilities

The Company is in the process of evaluating the impact of the recent Supreme Court Judgment in case of âVivekananda Vidyamandir And Others Vs The Regional Provident Fund Commissioner (II) West Bengalâ and the related circular (Circular No. C-I/1(33)2019/Vivekananda Vidya Mandir/284) dated March 20, 2019 issued by the Employeesâ Provident Fund Organisation in relation to non-exclusion of certain allowances from the definition of âbasic wagesâ of the relevant employees for the purposes of determining contribution to provident fund under the Employeesâ Provident Funds & Miscellaneous Provisions Act, 1952. In the assessment of the management which is supported by legal advice, the aforesaid matter is not likely to have a material impact for the year ended March 31, 2019 and accordingly, no provision has been made in these Financial Statements.

2. Pending litigations

The Companyâs pending litigations other than those arising in the ordinary course of insurance business comprise of claims against the Company primarily on account of proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities as applicable, in note 1 above.

3. Actuarial assumptions

The policyholdersâ actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used by the Appointed Actuary in actuarial valuation is as below:

a) Interest rate assumptions:

b) Expense assumptions:

The expense assumptions are set on the basis of the expense analysis. These are fixed renewal expenses (prescribed below) and investment expenses are charged as a % of fund.

Claim expenses assumption is Rs. 126 per maturity/ surrender claim and Rs. 2,275 for death claim. The renewal and claim expenses are increased at an inflation rate of 6.5% p.a.

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality table (2006-08) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the LIC Annuitants (1996-1998) table.

d) Morbidity assumptions:

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.56 % p.a. (For the year ended March 31, 2018 14.42% p.a.)

4. Employee benefits

A) Defined contribution plans:

During the year, the Company has recognised below amount in the Revenue Account under defined contributions plans.

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Life Insurance

Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), âEmployee benefitsâ Actuarial gains or losses are recognised in the Revenue Account.

b) The following tables sets out the status of the Gratuity plan as at March 31, 2019:

The Company has recognised following amounts in the Balance Sheet:

e) Actual return on plan assets of the Gratuity plan is a gain of Rs. 28,253 thousands (Previous year ended March 31, 2018 gain of Rs. 21,147 thousands).

f) The Company expects to fund Rs. 110,086 thousands (Previous year ended March 31, 2018 Rs. 37,858 thousands) towards the Companyâs Gratuity plan during FY 2020.

II. Basis used to determine the overall expected return:

C) Other long term employee benefits:

I. Long term compensated absences: This is an unfunded employee benefit. The liability for accumulated long term absences is determined by actuarial valuation using projected unit credit method. The assumptions used for valuation are as given below:

5. Employee Stock Option Scheme (ESOS)

(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding company. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme.

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme, ESOS 2017 and ESOS 2018 scheme. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017 and ESOS 2018 is based on the market price of the shares of the Company, as defined in the respective ESOS scheme.

(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees. The intrinsic value of the options issued under the above referred schemes is âNilâ as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognised in the books. Had the Company followed the fair value method for valuing its options, the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to Rs. 279,466 thousands (Previous year ended March 31, 2018 Rs. 144,712 thousands) and the profit after tax would have been lower by Rs. 174,116 thousands (Previous year ended March 31, 2018 Rs. 77,997 thousands). Consequently, Companyâs basic and diluted earnings per share would have been Rs. 6.25 and Rs. 6.24 respectively (Previous year: Rs. 5.49 and Rs. 5.46 respectively).

(iv) Exercise Period under the various ESOS:

The Companyâs shares were listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012, ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever is later subject to the norms prescribed by the Nomination & Remuneration Committee. Under ESOS 2005, the vested options were required to be exercised by the employees within three years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the Companyâs shares, vested options under all ESOS schemes are required to be exercised by the employees within five years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee.

Salient features of all the existing grants under the ten schemes are as stated below:

A) ESoS 2005

There are seven grants upto March 31, 2019 which are those issued on September 1, 2005 (two grants), November 8, 2006, August 3, 2007, July 15, 2008, August 16, 2009 and December 3, 2009. Total number of options granted upto March 31, 2019 are 9,964,650 (Previous year ended March 31, 2018: 9,964,650).

There are no options outstanding and exercisable for ESOS 2005 in the year ended March 31, 2019 and in the year ended March 31, 2018.

B) ESoS 2010

There are two grants issued upto March 31, 2019 which are those issued on June 30, 2010 and October 1, 2010. The total number of options granted upto March 31, 2019 are 5,158,000 (Previous year ended March 31, 2018: 5,158,000). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is Nil. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2010 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

C) ESoS 2011

There are one grant upto March 31, 2019 which was issued on October 1, 2011. The total number of options granted upto March 31, 2019 are 4,753,000 (Previous year ended March 31, 2018: 4,753,000). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is Nil. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2011 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

D) Esos 2012

There are two grants issued upto March 31, 2019 which were on October 1, 2012 and October 1, 2013. The total number of options granted upto March 31, 2019 are 14,275,310 (Previous year ended March 31, 2018: 14,275,310). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 2.51 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2012 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

E) ESOS 2014

There are two grants issued upto March 31, 2019 which were on December 1, 2014 and February 1, 2015. The total number of options granted upto March 31, 2019 are 15,034,250 (Previous year ended March 31, 2018: 15,034,250). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 3.25 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2014 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

F) esos 2015

There are two grants issued as of March 31, 2019 which were on October 1, 2015 and November 1, 2015. Total number of options granted till March 31, 2019 are 9,733,300 (Previous year ended March 31, 2018: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 4.32 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2015 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

G) ESoS 2016

There are two grants issued as of March 31, 2019 which were on October 1, 2016 and November 1, 2016. Total number of options granted till March 31, 2019 are 3,836,850 (Previous year ended March 31, 2018: 3,836,850). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 5.30 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2018.

A summary of status of ESOS 2016 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

H) ESoS 2017

There is one grant issued as of March 31, 2019 which was on March 14, 2018. Total number of options granted till March 31, 2019 are 3,069,206 (Previous year ended March 31, 2018: 3,069,206). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 6.06 years. (Previous year ended March 31, 2018: 7.06 years).

A summary of status of ESOS 2017 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

I) ESoS (Trust) 2017

There is one grant issued as of March 31, 2019 was on March 14, 2018. Total number of options granted till March 31, 2019 are 536,394 (Previous year ended March 31, 2018: 536,394). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 6.06 years. (Previous year ended March 31, 2018: 7.06 years).

A summary of status of ESOS (Trust) 2017 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

J) ESOS 2018

There is one grant issued as of March 31, 2019 which was on October 1, 2018. Total number of options granted till March 31, 2019 are 1,873,353 (Previous year ended March 31, 2018: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2019 is 6.61 years. (Previous year ended March 31, 2018: Nil).

A summary of status of ESOS 2018 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

Method of computation of fair value of options:

The fair value of options has been calculated using the Black-Scholes model. The key assumptions used in Black-Scholes model for calculating fair value of options as on the date of grant are as follows:

6. Managerial remuneration

The appointment and remuneration of managerial personnel is in accordance with the requirements of Section 34A of the Insurance Act, 1938 as amended from time to time including the amendment brought by the Insurance Laws (Amendment) Act, 2015 and has been approved by the IRDAI.

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), âEmployee Benefitsâ, that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholderâs Profit and Loss Account.

7. Remuneration payable/paid to non-whole time independent directors Rs. 8,000 thousands (Previous year ended March 31, 2018 Rs. 6,000 thousands) is included under Schedule 3A under the head âDirectors Commissionâ.

8. As prescribed by IRDAI vide its letter Ref: 75/ IRDA/Life/HSLIC dated March 13, 2015, details of options granted to and exercised by Key Managerial Personnel as defined under the Companies Act, 2013, are as follows:

9. Operating expenses

Details of expenses incurred under the following heads as required by the IRDAI vide the Master Circular are as given below:

10. Leases

In accordance with the Accounting Standard (AS) 19, âLeasesâ, the following disclosures are made in respect of operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are Rs. 74 thousands (Previous year ended March 31, 2018: Rs. 2,410 thousands).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Companyâs financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for predecided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised.

b) The Company has taken properties under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head Rent, rates and taxes in the Revenue Account are Rs. 5,99,347 thousands (Previous year ended March 31, 2018: Rs. 5,86,450 thousands).

The minimum future lease rentals payable under non-cancellable operating leases for specified duration in respect of such leases amount to the following:

The lease arrangements contain provisions for renewal and escalation. The terms of the lease agreements do not contain any exceptional/ restrictive covenants which will have significant detrimental impact on the Companyâs financials.

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent under the head Rent, rates and taxes in the Revenue Account are Rs. 13,358 thousands (Previous year ended March 31, 2018: Rs. 18,756 thousands).

d) The company has taken cloud services, networking equipment etc under operating lease. In respect of these operating leases, the lease rentals debited to rent under the head Rent, rates and taxes in the Revenue Account are Rs. 59,985 thousands (Previous year ended March 31, 2018: Rs. 40,840 thousands).

11. Provision for tax

During the year, the Company has made provision for taxation in accordance with the Income tax Act, 1961 and Rules and Regulations there under as applicable to the Company.

12. Foreign exchange gain/(loss)

The amount of net foreign exchange gain/(loss) debited to Revenue Account which included in Schedule 3 - Operating expenses related to insurance business is as follows:

13. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, the gross amount suggested to be spent by the Company during the year ended March 31, 2019 is Rs. 1,13,498 thousands (Previous year ended March 31, 2018 Rs. 94,883 thousands). The Company has spent Rs. 1,91,760 thousands (Previous year ended March 31, 2018: Rs. 98,009 thousands) on various CSR initiatives.

Amounts of related party transactions pertaining to CSR related activities for the year ended March 31, 2019 was Rs. Nil (previous year ended March 31, 2018 Rs. Nil)

14. Encumbrances

The assets of the Company are free from any encumbrances at March 31, 2019, except for Fixed Deposits and Government Securities, mentioned below, kept as margin against bank guarantees with exchange and collateral securities issued:

15. Investment property

As mandated under IRDAI circular IRDAI/CIR/F&I/INV/056/03/2016-17 investment in Real Estate Investment Trusts (REITâs) of Rs. 464,640 thousands (Previous year ended March 31, 2018 Rs. Nil) has been disclosed as part of the Investment Property.

16. Claims outstanding

As at March 31, 2019, there were 2773 claims amounting to Rs. 145,924 thousands (Previous year ended March 31, 2018 622 claims amounting to Rs. 69,315 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

17. Provision for NPA (non standard assets) for debt portfolio

Provision for doubtful debts is made in line with the âGuidelines on Prudential norms for income recognition, Asset classification, Provisioning and other related matters in respect of Debt portfolioâ as specified by IRDAI vide the Master Circular dated December 11, 2013 and has been recognised in the Revenue Account as per below table:

During the year ended March 31, 2019 the Company had classified its investment in IL&FS Ltd. as NPA, owing to the default of interest payment on one of the Non-Convertible Debentures (NCDâs) held in Unit Linked Funds by the issuer IL&FS Ltd. Provision of Rs. 1,62,500 thousands at 25% of Face Value (Rs. 6,50,000 thousands) and interest accrued till date of downgrade to âDâ Default rating category of Rs. 34,958 thousands has been recognized in the Revenue account in addition to the Mark to Market (MTM) impact of Rs. 1,53,810 thousands in lines with the IRDAI valuation norms which is recognized as Fair Value Change.

18. Segmental reporting

As per Accounting Standard (AS) 17, âSegment Reportingâ, read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1.

19. Shareholdersâ contribution

Shareholdersâ contribution of Rs. 3,089,502 thousands to the Policyholdersâ account for the current year (Previous year ended March 31, 2018 Rs. 1,566,482 thousands), subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the Shareholders.

Shareholdersâ contribution of Rs. 1,566,482 thousands to the Policyholdersâ account for the year ended March 31, 2018 has been approved by shareholders at the Annual General Meeting held on July 20, 2018.

20. Unit Linked Funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular.

21. The Micro, Small and Medium Enterprises Development Act, 2006

According to information available with the management, on the basis of intimation received from suppliers, regarding their status under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act), the details of amounts due to Micro and Small Enterprises under the said Act as on March 31, 2019 are as follows:

21. Earnings per equity share

Basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for effects of all dilutive equity shares.

22. Subsidiaries

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited (âHDFC Pensionâ) is a wholly owned subsidiary of HDFC Life Insurance Company Limited and has been a licensed pension fund manager since 2013. Since then, HDFC Pension has been a preferred pension fund manager and the asset under its management have grown to over Rs. 5,165 Crs. HDFC Pension was granted Certificate of Registration dated February 13, 2019 (Registration code: POP246022019) by the PFRDA for acting as Point of Presence (PoP) under National Pension System, to provide PoP - NPS - Distribution and Servicing services for public at large.

ii. âHDFC International Life and Re Company Limited (âHDFC International Life & Reâ) is a wholly owned foreign subsidiary incorporated in the Dubai International Financial Centre (âDIFCâ) on January 10, 2016 under the Companies Law, DIFC Law No.2 of 2009 under registration number 2067. HDFC International Life & Re is regulated by the Dubai Financial Services Authority (âDFSAâ) and is licensed to undertake life reinsurance business. It provides risk-transfer solutions, prudent underwriting solutions and value added services, among others, across individual life, group life and group credit life lines of business. HDFC International Life & Re currently offers reinsurance solutions in the Gulf Cooperation Council (âGCCâ) and Middle East & North Africa (âMENAâ) regions. In December 2018, HDFC International Life & Re has been assigned a long-term insurer financial strength rating of âBBBâ with a stable outlook by S&P Global Ratings.

23. Interim Dividend

During the year ended March 31, 2019, the Board of Directors of the Company have approved at the Board Meeting held on March 7, 2019 an interim dividend @16.3% (Previous year ended March 31, 2018 @ 13.6%) on equity share of the face value of Rs. 10 i.e. @ Rs. 1.63 (Previous year ended March 31, 2018 @ Rs. 1.36) per equity share, amounting to Rs. 3,964,202 thousands (including dividend distribution tax), (Previous year ended March 31, 2018 Rs. 3,288,426 thousands including dividend distribution tax).

24. During the year ended March 31, 2019, the Company had transactions with related parties, which have been identified by the management as per the requirements of the Accounting Standard (AS) 18, âRelated Party Disclosuresâ. Details of these related parties, nature of the relationship, transactions entered into with them and the balances in related party accounts at year end are as mentioned below:

The transactions between the Company and its related parties are as given below. As per the requirement of Corporate Governance guidelines for Insurers in India, 2016, issued by IRDAI, payments made to group entities from the Policyholdersâ Funds are included in the below disclosures:

25. Regroupings or reclassification

During the year ended March 31, 2019, there are no regroupings or reclassification of the figures reported in previous year financial statement.

26. Disclosure on other work given to auditors

Pursuant to clause 7.1 of Corporate Governance Guidelines for insurers in India, 2016 issued by IRDAI applicable from FY 2017, the remuneration paid to statutory auditors/internal auditor or its associates for services other than statutory/internal audit are disclosed below:

27. Share application money received pending allotment of shares amounting to Rs. 3,929 thousands (Previous year Rs. 8,874 thousands) disclosed in the Balance Sheet as on March 31, 2019 relates to the application money received towards Employee Stock Option Plans under Companyâs Employee Stock Options Scheme(s).

28. The Company claims credit of Goods and Services Tax (âGSTâ) on input services, which is set off against GST on output services. The unutilised credits towards GST on input services are carried forward under âSchedule 12 -Advances and Other Assetsâ in the Balance Sheet.

29. HDFC Life had invested across segments in Tata Sons Ltd. NCDâs since 2010. Tata Sons converted to a Private Ltd. Company from Public Ltd. Company in August 2018. As per IRDAI Act 27A (4) Insurance companies are prohibited from investing in Private Limited Companies. After the conversion to a Private Limited Co. HDFC Life had to sell its investments in securities issued by Tata Sons to ensure compliance with the regulation. The sale in these NCDâs resulted in realized loss of Rs. 333,263 thousands in Non-Par Individual and Group Life, Rs. 12,116 thousands in Par Individual Life and Rs. 114,822 thousands loss in Unit Linked Funds.

B. Additional disclosures

1. Performing and non-performing investments

The company did not hold any non-performing Investments during the year except as mentioned below:

2. Deposits made under local laws

The Company has no deposit (For the year ended March 31, 2018: Rs. Nil) made under local laws or otherwise encumbered in or outside India as of March 31, 2019, except investments and deposits detailed in Note 14 of Schedule 16(B).

3. business for social and rural sector as required under IRDAI (obligations of insurers to Rural and Social Sectors) Regulations, 2015, issued by IRDAI

4. Allocation of investments and investment income

5. Percentage of risks retained and risk reinsured as certified by the Appointed Actuary

a. The persistency ratios have been calculated in accordance with the IRDAI circular no. IRDA/ACT/CIR/ MISC/035/01/2014 dated January 23, 2014 and hence are with a lag of one month

b. The persistency ratios have been calculated for the policies issued in the March to February period of the relevant years. For eg: the 13th month persistency for current year is calculated for the policies issued from March 2017 to February 2018

c. Group business, where persistency is measurable, has been included in the calculations. The previous year numbers have also been restated to include Group business

d. Rural business is excluded in the calculation of the persistency ratios

Solvency ratio has been stated on the basis of computation certified by Appointed Actuary and it excludes inadmissible assets as required by the IRDA (Assets, Liabilities and Solvency Margin of Insurers) regulations, 2016 and directions received from IRDAI from time to time.

6. Impairment of investments

In accordance with the Financial Statements Regulations, Schedule A Part I on Accounting Principle for Preparation of Financial Statements on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2019 and accordingly impairment provisions have been provided as below.

Listed equity shares

A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head âProvision for diminution in the value of investmentsâ and corresspondingly, Policyholdersâ and Shareholdersâ Fair Value Change Account under Policyholdersâ and Shareholdersâ Funds respectively in the Balance Sheet have been adjusted for such (reversal)/provision of impairment loss, the details of which are given below:

Security Receipts and Venture Fund

A provision/(reversal) for impairment loss has been recognised in Revenue Account and Profit and Loss Account under the head âProvision for diminution in the value of investmentsâ and corresspondingly, Short Term Other than Approved Investments under Schedule 8A (Policyholdersâ Investments) and Schedule 8 (Shareholdersâ Investments) respectively have been adjusted for such diminuton, the details of which are been given below:

7. Following is the disclosure related to Participation of Insurers in Repo\Reverse Repo transactions in Governments Corporate Debt Securities in pursuant to IRDAI notification ref IRDA/F&I/CIR/INV/250/12/2012 dated December 4, 2012

8. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2019 as a business day. NAV for all unit linked segments were declared on March 31, 2019. All applications received till 3 PM on March 31, 2019, were processed with NAV of March 31, 2019. Applications received after this cut-off for unit linked funds are taken into the next financial year.

9. On August 8, 2016, the Board of Directors of HDFC Life Insurance Company Limited (âHDFC Lifeâ), Max Life Insurance Company Limited (âMax Lifeâ), Max Financial Services Limited (âMax Financialâ) and Max India Limited (âMax Indiaâ) at their respective board meetings, approved entering into definitive agreements for the amalgamation of the businesses between the above entities through a composite Scheme of Arrangement (âSchemeâ). This transaction was mutually terminated on July 31, 2017 since the parties did not receive the requisite regulatory approvals.

Consequently, provisions no longer required were written back during the year ended March 31, 2019 under the expense head âEmployeeâs remuneration and welfare benefitsâ amounting to Rs. Nil (Previous year ended March 31, 2018 Rs. 311,000 thousands) in Schedule 3 - Operating Expenses and expense head âLegal & professional chargesâ amounting to Rs. 32,862 thousands (Previous year ended March 31, 2018 Rs. 175,525 thousands) and âAuditors fees, expenses etcâ amounting to Rs. Nil (Previous year ended March 31, 2018 Rs. 3857 thousands) in Schedule 3A - Shareholder Expenses.

10. Long term contracts

11. As per IRDAI Master Circular on Unclaimed Amounts of Policyholders IRDA/F&A/CIR/Misc/173/07/2017 dated July 25, 2017, the unclaimed amount of policyholders outstanding for a period of more than 10 years as on September 30, every year has been transferred to Senior Citizenâs Welfare Fund.

Mar 31, 2018

Allocation methodology

The allocation of revenue, expenses, assets and liabilities to the business segments is done on the following basis:

a) Revenue, expenses, assets and liabilities, which are directly attributable and identifiable to the respective

business segments, are directly allocated for in that respective segment; and

b) Revenue, expenses, assets and liabilities which are not directly identifiable to a business segment though attributable and other indirect expenses which are not attributable to a business segment, are allocated based on one or combination of some of the following parameters, as considered appropriate by the management in adherence with the policy approved by the board of directors :

i) effective premium income

ii) number of policies

iii) number of employees

iv) man hours utilized

v) premium income

vi) commission

vii) sum assured

viii) mean fund size

ix) operating expenses

x) benefits paid

The accounting policies used in segmental reporting are the same as those used in the preparation of the financial statements.

1. Employee benefits

A) Short term employee benefits

All employee benefits payable within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries and bonuses, short term compensated absences, premium for staff medical insurance (hospitalization), premium for Employee Group Term Insurance Scheme, Employee State Insurance Corporation Scheme, Employee Deposit Linked Insurance Scheme and Employee Labour Welfare Fund Scheme are accounted for in the period in which the employee renders the related service. All short term employee benefits are accounted for on an undiscounted basis.

B) Post-employment benefits

The Company has both defined contribution and defined benefit plans.

(i) Defined contribution plans:

The Superannuation Scheme, Employee Provident Fund Scheme (Company contribution) and the National Pension Scheme (Company contribution) are the defined contribution plans. The contributions paid/payable under the plan are made when due and charged to the Revenue Account on an undiscounted basis during the period in which the employee renders the related service. The Company does not have any further obligation beyond the contributions made to the funds.

(ii) Defined benefit plans:

The Gratuity plan of the Company is the defined benefit plan, which is a funded plan. The gratuity benefit payable to the employees of the Company is in compliance with the provisions of "The Payment of Gratuity Act, 1972". The present value of the obligations under such defined benefit plan is determined on the basis of actuarial valuation using the projected unit credit method, which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. The discount rate used for actuarial valuation is based on the yield of Government Securities. The Company fully contributes the net ascertained liabilities under the plan to the HDFC Life Insurance Company Limited Employees Group Gratuity Plan. The Company recognizes the net defined benefit obligation of the gratuity plan, taking into consideration the defined benefit obligation using actuarial valuation and the fair value of plan assets at the Balance Sheet date, in accordance with Accounting Standard (AS) 15 (Revised), ''Employee Benefits''. Actuarial gains or losses, if any, due to experience adjustments and the effects of changes in actuarial assumptions are accounted for in the Revenue Account, in the period in which they arise.

C) Other long term employee benefits

Other long term employee benefits include accumulated long term compensated absences and long term incentive plans.

Accumulated long term compensated absences are entitled to be carried forward for future encashment or a ailment, at the option of the employee subject to Company''s policies and are accounted for based on actuarial valuation determined using the projected unit credit method.

Long term incentive plans are subject to fulfillment of criteria prescribed by the Company and are accounted for at the present value of future expected benefits payable using an appropriate discount rate.

Actuarial gains or losses, if any, due to experience adjustments and the effects of changes in actuarial assumptions are accounted for in the Revenue Account, as the case may be, in the period in which they arise.

2. Employee Stock Option Scheme(ESOS)

The Company has formulated Employee Stock Option Scheme 2005 (ESOS 2005), Employee Stock Option Scheme 2010 (ESOS 2010), Employee Stock Option Scheme 2011 (ESOS 2011), Employee Stock Option Scheme 2012 (ESOS 2012) and, ESOS (Trust) 2017 which are administered through the HDFC Standard Life Employees Stock Option Trust (ââthe Trust") and Employee Stock Option Scheme 2014 (ESOS 2014) and Employees Stock Option Scheme 2015 (ESOS 2015), Employee Stock Option Scheme 2016 (ESOS 2016), Employee Stock Option Scheme 2017 (ESOS 2017) which are directly administered by the Company. The schemes provide that eligible employees are granted options that vest in a graded manner to acquire equity shares of the Company. The options are accounted for on an intrinsic value basis in accordance with the Guidance Note on Accounting for Employee Share based Payments, issued by the Institute of Chartered Accountants of India (ICAI). The intrinsic value is the amount by which the value of the underlying share determined by an independent valuer exceeds the exercise price of an option. The intrinsic value of options, if any, at the grant date is amortized over the vesting period.

3. Provisions, contingent liabilities and contingent assets

Contingent liabilities are disclosed in respect of;

b) present obligations that arise from past events, where it is probable but not likely that an outflow of resources embodying economic benefits will be required to settle the obligations or a reliable estimate of the amounts of the obligations cannot be made.

Contingent assets are neither accounted for nor disclosed.

4. Leases

A) Finance leases

Leases under which the lessee assumes substantially all the risk and rewards of ownership of the asset are classified as finance leases. Such leased asset acquired are capitalized at fair value of the asset or present value of the minimum lease rental payments at the inception of the lease, whichever is lower.

B) Operating leases

Leases where the less or effectively retains substantially all the risk and the benefits of ownership over the lease term are classified as operating leases. Leased rental payments under operating leases including committed increase in rentals are accounted for as an expense, on a straight line basis, over the non-cancellable lease period.

5. Taxation:

A) Direct tax

I) Provision for income tax

II) Deferred tax

In accordance with the provisions of the Accounting Standard (AS) 22, "Accounting for Taxes on Income", with respect to the carry forward of losses under the Income Tax regulations, the deferred tax asset is recognized only to the extent that there is a virtual certainty supported by convincing evidence that future taxable income will be available against which the deferred tax asset can be realized.

B) Indirect tax

The Company claims credit of service tax / goods and services tax on input services, which is set off against service tax / goods and services tax on output services. As a matter of prudence, unutilized credits towards service tax / goods and services tax on input services are carried forward under ''Schedule 12 -Advances and Other Assets'' in the Balance Sheet, wherever there is reasonable certainty of utilization.

6. Funds for Future Appropriations

The Funds for Future Appropriations (FFA), in the participating segment, represents the surplus, which is not allocated to policyholders or shareholders as at the Balance Sheet date. Transfers to and from the fund reflect the excess or deficit of income over expenses respectively and appropriations in each accounting period arising in the Company''s Policyholders'' Fund. Any allocation to the par policyholders would also give rise to a transfer to Shareholders'' Profit and Loss Account in the required proportion.

7. Earnings per share

In accordance with the requirement of Accounting Standard (AS) 20, "Earnings Per Share", basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares. Potential equity shares are treated as dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations.

8. Cash and cash equivalents

Cash and cash equivalents for the purposes of Receipts and Payments Account comprise of cash and cheques in hand, bank balances, fixed deposits with original maturity of three months or less, CBLO, Reverse Repo, highly liquid mutual funds and highly liquid investments that are readily convertible into measurable amounts of cash and which are subject to insignificant risk of change in value. Receipts and Payments Account is prepared and reported using the Direct Method in accordance with Accounting Standard (AS) 3, "Cash Flow Statements" as per requirements of Para 2.2 of the Master Circular.

$Excludes guarantee given to National Stock Exchange in relation to Initial Public Offer of the Company amounting to Rs, 839,500 thousands as all related obligations have been accounted for.

#Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/assessment orders received by the Company from the respective tax authorities. The Company has filed appeals against the demand notices/assessment orders with the appellate authorities and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard.

*As per IRDAI Master Circular on Unclaimed Amounts of Policyholders dated July 25, 2017, the unclaimed amount of policyholders outstanding for a period of more than 10 years as on September 30, 2017 has been transferred to Senior Citizenâs Welfare Fund on March 01, 2018. The transferred amount has been disclosed here as a contingent liability as required by the Circular.

9. Pending litigations

The Company''s pending litigations other than those arising in the ordinary course of insurance business comprise of claims against the Company primarily on account of proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities as applicable, in note 1 above.

10. Actuarial assumptions

The policyholdersâ actuarial liabilities are determined based on assumptions as to the future experience of the policies. The principal assumptions are related to interest, expenses, mortality, morbidity, persistency, and additionally in the case of participating policies, bonuses and tax. The assumptions are based on prudent estimates of the future experience, and hence include margins for adverse deviations over and above the best estimate assumptions. A brief of the assumptions used in actuarial valuation is as below:

a) Interest rate assumptions:

The valuation rate of interest is determined based on the expected return on existing assets, current asset mix, expected investment return on the future investment taking into consideration the asset classes mix and expected future asset mix. The interest rates used for the valuation vary according to the type and term of the product and are in the range of 5.20% to 7.00% (Previous year ended March 31, 2017: 5.20% to 7.35%).

b) Expense assumptions:

The expense assumptions are set on the basis of the expense analysis. These are fixed renewal expenses and investment expenses charged as a % of fund. The renewal and claim expenses are increased at an inflation rate of 6.5% p.a.

c) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality table (2006-08) and are based on the latest experience analysis of the business.

In the case of annuity benefits, mortality assumption is based on the LIC Annuitants (1996-1998) table.

d) Morbidity assumptions:

e) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product.

f) Provision for free-look period:

If a policy which is in force as at the valuation date is subsequently cancelled in the free-look period,

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

This is a funded defined benefit plan for qualifying employees under which the Company makes a contribution to the HDFC Standard Life Insurance Company Limited Employees Gratuity Trust (Trust). The plan provides for a lump sum payment as determined in the manner specified under The Payment of Gratuity Act, 1972, to the vested employees either at retirement or on then there could be a strain in the policyholder fund on account of the amount payable on free-look cancellation, to the extent the amount is higher than reserves held for that policy. In order to avoid the future valuation strain as a result of the free-look cancellations, reserves on account of the above are held. The free-look reserve is calculated as total strain for all policies that are eligible for free-look cancellations at the valuation date, multiplied by a factor, representing the expected assumptions for free-look cancellations.

g) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

h) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.42 % p.a. (For the year ended March 31, 2017 14.42% p.a.) death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee benefits". Actuarial gains or losses are recognized in the Revenue Account.

e) Actual return on plan assets of the Gratuity plan is a gain of Rs, 21,147 thousands (Previous year ended March 31, 2017 gain of Rs, 41,416 thousands).

f) The Company expects to fund Rs, 37,858 thousands (Previous year ended March 31, 2017 Rs, 61,432 thousands) towards the Companyâs Gratuity plan during FY 2019.

II. Basis used to determine the overall expected return:

11. Employee Stock Option Scheme (ESOS)

(i) The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 and ESOS (Trust) 2017 schemes. These schemes are administered by the HDFC Standard Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding company. The options are granted to the employees from these tranches of shares. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS (Trust) 2017 is based on the market price of the shares of the Company, as defined in the ESOS (Trust) 2017 scheme.

(ii) The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme, ESOS 2016 scheme and ESOS 2017 scheme. The said schemes are directly administered by the Company. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI. The exercise price, of the options granted under ESOS 2017 is based on the market price of the shares of the Company, as defined in the ESOS 2017 scheme.

(iii) The Company follows the intrinsic value method of accounting for stock options granted to employees. The intrinsic value of the options issued under the above referred schemes is Rs,Nil'' as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognized in the books. Had the Company followed the fair value method for valuing its options, the charge to the Revenue Account/Profit & Loss Account for the year would have been aggregated to Rs, 144,712 thousands (Previous year ended March 31, 2017 Rs,224,706 thousands) and the profit after tax would have been lower by Rs, 77,997 thousands (Previous year ended March 31, 2017 Rs, 122,056 thousands). Consequently, Company''s basic and diluted earnings per share would have been Rs, 5.49 and Rs, 5.46 respectively (Previous year: Rs, 4.41 and Rs,4.38 respectively).

(iv) Exercise Period under the various ESOS:

The Companyâs shares were listed on National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) on November 17, 2017. Prior to listing, for all grants issued under the ESOS 2010, ESOS 2011, ESOS 2012, ESOS 2014, ESOS 2015 and ESOS 2016 schemes, the vested options were required to be exercised by the employees within five years from the date of vesting or the date of an Initial Public Offering (IPO) whichever is later subject to the norms prescribed by the Nomination & Remuneration Committee. Under ESOS 2005, the vested options were required to be exercised by the employees within three years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee. Post listing of the companyâs shares, vested options under all ESOS schemes are required to be exercised by the employees within five years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee.

C) ESOS 2011

There is one grant up to March 31, 2018 which was issued on October 1, 2011. The total number of options granted up to March 31, 2018 are 4,753,000 (Previous year ended March 31, 2017: 4,753,000). The weighted average remaining contractual life of the options outstanding as at March 31, 2018 is 1.08 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is Salient features of all the existing grants under the seven schemes are as stated below:

A) ESOS2005

There are seven grants up to March 31, 2018 which are those issued on September 1, 2005 (two grants), November 8, 2006, August 3, 2007, July 15, 2008, August 16, 2009 and December 3, 2009. Total number of options granted up to March 31, 2018 are 9,964,650 (Previous year ended March 31, 2017: 9,964,650).

There are no options outstanding and exercisable for ESOS 2005 in the year ended March 31, 2018 and in the year ended March 31, 2017.

B) ESOS 2010

There are two grants issued up to March 31, 2018 which are those issued on June 30, 2010 and October 1, 2010. The total number of options granted up to March 31, 2018 are 5,158,000 (Previous year ended March 31, 2017: 5,158,000). The weighted average remaining contractual life of the options outstanding as at March 31, 2018 is 0.50 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5 (iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2017. not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2017.

A summary of status of ESOS 2011 in terms of options granted, forfeited, exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

F) ESOS 2015

There are two grants issued as of March 31, 2018 which were on October 1, 2015 and November 1, 2015. Total number of options granted till March 31, 2018 are 9,733,300 (Previous year ended March 31, 2017: 9,733,300). The weighted average remaining contractual life of the options outstanding as at March 31, 2018 is 5.50 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5

G) ESOS2016

There are two grants issued as of March 31, 2018 which were on October 1, 2016 and November 1, 2016.Total number of options granted till March 31, 2018 are 3,836,850 (Previous year ended March 31, 2017: 3,836,850). The weighted average remaining contractual life of the options outstanding as at March 31, 2018 is 6.02 years. Due to the exercise period of the options being variable prior to listing (Refer Note 5

H) ESOS 2017

There is one grant issued as of March 31, 2018 which was on March 14, 2018. Total number of options granted till March 31, 2018 are 3,069,206 (Previous year ended March 31, 2017: Nil). The weighted average remaining contractual life of the options outstanding as at March 31, 2018 is 7.06 years (Previous year ended March 31, 2017: Nil).

(iv)), it is not possible to provide a comparative number for the weighted average remaining contractual life of the options outstanding as at March 31, 2017.

A summary of status of ESOS 2017 in terms of options granted, forfeited and exercised, outstanding and exercisable along with the weighted average exercise price is as given below:

The managerial remuneration mentioned above does not include the perquisite value as per Income Tax Act, 1961 of employee stock options exercised and the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits", that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by IRDAI has been charged to the Shareholderâs Profit and Loss Account.

7. Remuneration payable to non-whole time independent directors '' 6,000 thousands (Previous year ended March 31, 2017 '' 8,000 thousands) is included under Schedule 3A under the head "Directors Commission".

12. Leases

In accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are '' 2,410 thousands (Previous year ended March 31, 2017: '' 4,856 thousands).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company''s financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for predecided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised.

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent in the Revenue Account are Rs, 22,551 thousands (Previous year ended March 31, 2017: Rs, 19,872 thousands).

13. Provision for tax

During the year, the Company has made provision for tax (net) amounting to Rs, 1,932,886 thousands (Previous year ended March 31, 2017: Rs, 1,739,873 thousands), Rs, 1,755,474 thousands charged to the Revenue Account (Previous year ended March 31, 2017: Rs, 1,519,776 thousands) and Rs, 177,412 thousands charged to the Profit and Loss Account (Previous year ended March 31, 2017: Rs, 220,097 thousands), in accordance with the Income tax Act, 1961 and Rules and Regulations there under as applicable to the Company.

14. Foreign exchange gain/(loss)

The amount of net foreign exchange loss debited to Revenue Account Rs, 1,260 thousands is included in Schedule 3 - Operating expenses related to insurance business (Previous year ended March 31, 2017, net foreign exchange gain credited to Revenue Account Rs, 1,080 thousands).

15. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, the gross amount suggested to be spent by the Company during the year ended March 31, 2018 is Rs,94,883 thousands (Previous year ended March 31, 2017 Rs, 108,700 thousands). The Company has spent Rs, 98,009 thousands (Previous year ended March 31, 2017: Rs, 109,100 thousands) on various CSR initiatives.

16 Derivative contracts:

I n accordance with the IRDAI circular no. I RDA/F&I/ INV/CIR/138/06/2014 dated June 11, 2014 (''the IRDAI circular on Interest Rate Derivatives'') and Investment Regulation, 2016 allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates.

a) The Company during the financial year 2017-18, has not transacted in exchange traded Interest Rate Future (IRF) transactions and total notional principal amount of exchange traded interest rate futures outstanding at the end of the year is '' Nil. However, the Company during the previous financial year 2016-17, as part of its Hedging strategy, entered into exchange traded Interest Rate Future (IRF) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI circular on Interest Rate Derivatives.

Exchange Traded Interest rate futures are standardized interest rate derivative contracts traded on a recognized stock exchange to buy or sell a notional debt security or Government Bond (GOI) or Treasury Bill (T-Bill) of at a specified future date, at a price determined at the time of the contract with an objective to lock in the price of an interest bearing security at a future date.

The fair value for IRF instrument is considered as the daily settlement price on NSE. If the settlement price is not available on NSE, then the daily settlement price on BSE is considered for valuation of IRFs.

Qualitative Disclosures on risk exposure in Fixed Income Derivatives:

Overview of business and processes:

a) Fixed Income Derivative Hedging instruments:

The Company uses derivative instrument (IRF) to minimize exposure to fluctuations in interest rates on plan assets and liabilities. This hedge is carried in accordance with its established policies, goals and applicable regulations. The Company does not engage in derivative transactions for speculative purposes.

b) Derivative policy/process and Hedge effectiveness assessment:

c) Scope and nature of risk identification, risk measurement and risk monitoring:

The Risk Management Policy and Derivative Policy as approved by the Board sets appropriate market limits such as sensitivity limits and value-at-risk limits for exposures in interest rate derivatives.

As the IRFs are traded and settled by the recognized stock exchanges i.e. National Stock Exchange or Bombay Stock Exchange, the risk of counterparty failure would not exist, however the following risks pertaining to hedging using IRFs still exist:

i) Roll over risk

Futures contracts traded in the markets usually expire in 1-3 months. Since the period for which the hedge is established is longer, it necessitates frequent roll-overs from contracts approaching expiry into new contracts. Roll over risk is the cost involved in rolling over futures contracts. The financial impact of this risk can be reduced by actively managing the roll-over from existing contracts into new contracts.

ii) Basis Risk

Basis risk is the risk arising out of a mismatch in the tenure of the risk to be hedged and the tenure of available interest rate future contracts. The financial impact of this risk can be reduced to some extent by purchasing futures contracts so as to match the tenure of the risk to be hedged.

All financial risks of the derivative portfolio are measured and monitored on periodic basis.

In the current year, the investments reported above in non-linked investments include unlisted equity shares valued at cost of Rs, 5,392,723 thousands (Previous year ended March 31, 2017 Rs, 5,077,431 thousands) and equity shares awaiting listing having carrying value of Rs, Nil (Previous year ended March 31, 2017 Rs, Nil). The investments reported above in Linked investments includes unlisted equity shares awaiting listing having carrying value of Rs, Nil (Previous year ended March 31, 2017: Rs, Nil).

17. Investment property

The Company does not have any investment property as of March 31, 2018 and as of March 31, 2017.

18. Commitments made and outstanding for loans, investments and fixed assets

The estimated amount of commitments made and not provided for (net of advances) as at March 31, 2018 on account of investments is Rs, 1,974,308 thousands (For the Previous year ended March 31, 2017 Rs, 873,648

20. Claims outstanding

As at March 31, 2018, there were 622 claims amounting to Rs, 69,315 thousands (Previous year ended March 31, 2017, 105 claims amounting to Rs,20,755 thousands) settled and remaining unpaid for a period of more than six months. These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India.

* During the year ended March 31, 2018 there is a reversal of provision for doubtful debt recognized in earlier years due to sale of security previously classified as NPA.

# During the year ended March 31, 2017 there is a reversal of provision for doubtful debt recognized in earlier years due to transfer of assets to shareholder''s fund being "other investments" as required under IRDAI (Investment) Regulations 2016.

22. Segmental reporting

As per Accounting Standard (AS) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1. thousands) and estimated amount of commitments made and not provided for (net of advances) as at March 31, 2018 on account of fixed assets is ''65,177 thousands (For the Previous year ended March 31, 2017 '' 126,515 thousands).

21. Provision for NPA (non standard assets) for debt portfolio

Provision for doubtful debts is made in line with the ''Guidelines on Prudential norms for income recognition, Asset classification, Provisioning and other related matters in respect of Debt portfolioâ as specified by IRDAI vide the Master Circular dated December 11, 2013 and has been recognized in the Revenue Account as per below table:

23. Shareholders'' contribution

Shareholders'' contribution of '' 1,566,482 thousands to the Policyholdersâ account for the current year (Previous year ended March 31, 2017 '' 353,890 thousands), subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the Shareholders.

Shareholders'' contribution of '' 353,890 thousands to the Policyholders'' account for the year ended March 31, 2017 has been approved by shareholders at the Annual General Meeting held on July 17, 2017.

24. Unit Linked Funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular.

27. Subsidiaries:

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited ("HDFC Pension") is a wholly owned subsidiary of HDFC Standard Life Insurance Company Limited and has been a licensed pension fund manager since 2013. Since then, HDFC Pension has been a preferred pension fund manager and the asset under its management have grown to over Rs, 2,560 Crs. In 2014, the Pension Fund Regulatory & Development Authority ("PFRDA") issued a Request for Proposal ("RFP") inviting bids from Sponsors to select new pension fund managers. The bid of HDFC Life to this RFP was rejected by the PFRDA on the ground that it did not meet certain eligibility criteria under the RFP. The Hon''ble Delhi High Court, however, set aside the rejection, directing the PFRDA to grant a Letter of Appointment to HDFC Life thereby allowing

HDFC Pension to continue its business. While the PFRDA issued a letter of appointment to HDFC Life, it also challenged the Hon''ble High Court''s decision before the Hon''ble Supreme Court of India by way of a Special Leave Petition ("SLP"). The Hon''ble Supreme Court, by its order dated July 31, 2017, dismissed the PFRDA''s SLP and refused to interfere with the Hon''ble High Court''s decision. Accordingly, the Letter of Appointment issued to HDFC Life stands unqualified, with the appointment of HDFC Pension as a pension fund manager being confirmed.

ii. ''HDFC International Life and Re Company Limited'' is a wholly owned foreign subsidiary incorporated in Dubai on January 10, 2016 under the DIFC (Dubai International Finance Centre) Companies Law No. 2 of 2009 under registration number 2067. HDFC International Life & Re Company is regulated by the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business in the UAE. In future, the Company intends to also undertake life insurance business in other jurisdictions, with necessary regulatory permissions and approvals.

28. Interim Dividend

During the year ended March 31, 2018, the Board of Directors of the Company have approved at the Board Meeting held on December 8, 2017, an interim dividend @ 13.6% (Previous year ended March 31, 2017 @ 11.0%) on equity share of the face value of Rs, 10 i.e. @ Rs, 1.36 (Previous year ended March 31, 2017 @ Rs, 1.10) per equity share, amounting to Rs, 3,288,426 thousands (including dividend distribution tax), (Previous year ended March 31, 2017 Rs, 2,644,762 thousands).

29. Related party & other group company disclosures

During the year ended March 31, 2018, the Company had transactions with related parties, which have been identified by the management as per the requirements of the Accounting Standard (AS) 18, "Related Party Disclosures". Details of these related parties, nature of the relationship, transactions entered into with them and the balances in related party accounts at year end, are as mentioned below:

A) Related party disclosures as per Accounting Standard 18 Related parties and nature of relationship

Nature of relationship Name of the related party

Holding Company 1) Housing Development Finance Corporation Limited (HDFC Ltd.)

Investing Company 2) Standard Life (Mauritius Holdings) 2006 Limited

Wholly Owned Subsidiary 3) HDFC Pension Management Company Limited

4) HDFC International Life and Re Company Limited

Fellow Subsidiary 5) HDFC Asset Management Company Limited

6) HDFC Developers Limited (upto 24th January 2018)

7) HDFC Holdings Limited

8) HDFC Trustee Company Limited

9) HDFC Realty Limited (upto 24th January 2018)

10) HDFC Investments Limited

11) HDFC ERGO General Insurance Company Limited

12) GRUH Finance Limited

13) HDFC Sales Private Limited

14) HDFC Venture Capital Limited

15) HDFC Ventures Trustee Company Limited

16) HDFC Property Ventures Limited

17) HDFC Credila Financial Services Private Limited

18) HDFC Capital Advisors Limited

19) Griha Investments (subsidiary of HDFC Holdings Limited)

20) HDFC Education and Development Services Private Limited

21) Griha Pte Ltd., Singapore (Subsidiary of HDFC Investments Limited)

22) Windermer Properties Private Limited

23) Grandeur Properties Private Limited

24) Whinchester Properties Private Limited

25) Pentagram Properties Private Limited

26) Haddock Properties Private Limited

Entities over which control is 27) HDFC Investment Trust

exercised

28) HDFC Investment Trust II

Key Management Personnel 29) Mr. Amitabh Chaudhry - Managing Director and Chief Executive Officer

30) Ms. Vibha Padalkar - Executive Director and Chief Financial Officer

Relative of Key Management 31) Ms. Preeti Chaudhry (relative of Mr. Amitabh Chaudhry)

Personnel

32) Mr. Umesh Padalkar (relative of Ms. Vibha Padalkar)

33) Ms. Chhavi Kharb (relative of Mr. Amitabh Chaudhry)

32. Share application money received pending allotment of shares amounting to Rs, 8,874 thousands disclosed in the Balance Sheet as on March 31, 2018 relates to the application money received towards Employee Stock Option Plans under Company''s Employee Stock Options Scheme(s).

33. With effect from July 1, 2017, the Company claims credit of Goods and Services Tax (''GST'') on input services, which is set off against GST on output services. For the period up to June 30, 2017, the Company has claimed credit of service tax on input services, which has been set off against service tax on output services. Unutilized credits towards service tax on input services as at June 30, 2017, are eligible to be carried forward as per the transition provisions under the Central Goods and Services Tax Act, 2017. As a matter of prudence, unutilized credits towards GST /service tax on input services are carried forward under ''Schedule 12 -Advances and Other Assets'' in the Balance Sheet, only wherever there is reasonable certainty of utilization.

8. Impairment of investments

In accordance with the Financial Statements Regulations, Schedule A Part I on Accounting Principle for Preparation of Financial Statements on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2018 and accordingly impairment provisions have been provided as below.

Listed equity shares

A provision/(reversal) for impairment loss has been recognized in Revenue Account and Profit and Loss Account under the head "Provision for diminution in the value of investments" and correspondingly, Policyholders'' and Shareholdersâ Fair Value Change Account under Policyholders'' and Shareholdersâ Funds respectively in the Balance Sheet have been adjusted for such (reversal)/provision of impairment loss, the details of which are given below:

16. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/F&I/INV/ CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2018 as a business day. NAV for all unit linked segments were declared on March 31, 2018. All applications received till 3 PM on March 31, 2018, were processed with NAV of March 31, 2018. Applications received after this cut-off for unit linked funds are taken into the next financial year.

17. Details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016, as per notification issued by Ministry of Corporate Affairs (MCA) dated March 30, 2017, is not disclosed as this disclosure is required only for companies to which Schedule III of the Companies Act, 2013 is applicable.

18. On August 8, 2016, the Board of Directors of HDFC Standard Life Insurance Company Limited (""HDFC Life""), Max Life Insurance Company Limited ("Max Life"), Max Financial Services Limited ("Max Financial") and Max India Limited ("Max India") at their respective board meetings, approved entering into definitive agreements for the amalgamation of the businesses between the above entities through a composite Scheme of Arrangement ("Scheme"). This transaction was mutually terminated on July 31, 2017 since the parties did not receive the requisite regulatory approvals. Consequently, provisions no longer required were written back during the year ended March 31, 2018 under the expense head âEmployeeâs remuneration and welfare benefitsâ amounting to Rs, 311,000 thousands in Schedule 3 - Operating Expenses and expense head âLegal & professional chargesâ amounting to Rs, 175,525 thousands and âAuditors fees, expenses etcâ amounting to Rs, 3,857 thousands in Schedule 3A - Shareholder Expenses.

19. Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as required under any law/accounting standard for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

Notes

N.A - denotes funds not in existence during the relevant year.

¹ denotes fund launched during FY 2016, however there are no inflow/outflows during the previous and current year, hence the Income ratio are not available for FY 2018 and 2017 respectively.

² denotes the fund launched during the FY 2017 and hence the previous year ratios have been annualized.

³ denotes the fund closed during the FY 2017 and hence the previous year ratios have been annualized.

⁴ denotes the fund closed during the FY 2018 and hence the current year ratios have been annualized.

Mr. AKT Chari, Independent Director

Mar 31, 2017

10. Impairment of assets

The Company periodically assesses, using internal and external sources, whether there is any indication of impairment of asset. If any such indication of impairment exists, the recoverable amount of such assets is estimated. An impairment loss is recognized where the carrying value of these assets exceeds its recoverable amount. The recoverable amount is the higher of the asset''s net selling price and their value in use, which is the present value of the future cash flows expected to arise from the continuing use of asset and its ultimate disposal. When there is an indication that an impairment loss recognized for an asset in earlier accounting periods is no longer necessary or may have decreased, such reversal of impairment loss is recognized, except in case of revalued assets,

11. Loans

Loans are valued at historical cost (less repayments), subject to adjustment for accumulated impairment losses and provision for NPA, if any,

12. Foreign currency transactions

In accordance with the requirements of Accounting Standard (AS) 11, "The Effects of Changes in Foreign Exchange Rates", transactions in foreign currency are recorded in Indian Rupees at the rate of exchange prevailing on the date of the transaction, at the time of initial recognition. Monetary items denominated in foreign currency are converted in Indian Rupees at the closing rate of exchange prevailing on the Balance Sheet date. Non-monetary items like fixed assets, which are recorded at historical cost, denominated in foreign currency, are reported using the closing exchange rate at the date of transaction. Nonmonetary items other than fixed assets, which are recognized at fair value or other similar valuation, are reported using exchange rates that existed when the values were determined.

Exchange gains or losses arising on such conversions are recognized in the period in which they arise either in the Revenue Account or the Profit and Loss Account, as the case may be.

13. Segmental reporting

Identification of segments

As per Accounting Standard (AS) 17 on "Segment Reporting", read with the Financial Statements Regulations, the Company has prepared the Revenue Account and the Balance Sheet for the primary business segments namely Participating Life (Individual & Group), Participating Pension (Individual & Group), Participating Pension Group Variable, Non Participating Life (Individual & Group), Non Participating Pension (Individual & Group), Non Participating Life Group Variable, Non Participating Pension Group Variable, Non Participating - Annuity, Non Participating - Health, Unit Linked - Individual Life, Unit Linked - Individual Pension, Unit Linked - Group Life, Unit Linked -Group Pension. Since the business operations of the Company are given effect to in India and all the policies are written in India only, this is considered as one geographical segment,

Allocation methodology

The allocation of revenue, expenses, assets and liabilities to the business segments is done on the following basis:

a) Revenue, expenses, assets and liabilities, which are directly attributable and identifiable to the respective business segments, are directly allocated for in that respective segment; and

i) effective premium income

ii) number of policies

iii) number of employees

iv) man hours utilized

v) premium income

vi) commission

vii) sum assured

viii) mean fund size

ix) operating expenses

x) benefits paid

The accounting policies used in segmental reporting are the same as those used in the preparation of the financial statements.

14. Employee benefits

A) Short term employee benefits

B) Post-employment benefits

The Company has both defined contribution and defined benefit plans,

(i) Defined contribution plans:

(ii) Defined benefit plans:

The Gratuity plan of the Company is the defined benefit plan, which is a funded plan. The gratuity benefit payable to the employees of the Company is as per the provisions of "The Payment of Gratuity Act, 1972". The present value of the obligations under such defined benefit plan is determined on the basis of actuarial valuation using the projected unit credit method, which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. The discount rate used for actuarial valuation is based on the yield of Government Securities. The Company fully contributes the net ascertained liabilities under the plan to the HDFC Life Insurance Company Limited Employees Group Gratuity Plan. The Company recognizes the net defined benefit obligation of the gratuity plan, taking into consideration the defined benefit obligation using actuarial valuation and the fair value of plan assets at the Balance Sheet date, in accordance with Accounting Standard (AS) 15 (Revised), ''Employee Benefits''. Actuarial gains or losses, if any, due to experience adjustments and the effects of changes in actuarial assumptions are accounted for in the Revenue Account, in the period in which they arise,

C) Other long term employee benefits

Other long term employee benefits include accumulated long term compensated absences and long term incentive plans,

Long term incentive plans are subject to fulfillment of criteria prescribed by the Company and are accounted for at the present value of expected future benefits payable using an appropriate discount rate,

15. Employee Stock Option Scheme(ESOS)

The Company has formulated Employee Stock Option Scheme 2005 (ESOS 2005), Employee Stock Option Scheme 2010 (ESOS 2010), Employee Stock Option Scheme 2011 (ESOS 2011) and Employee Stock Option Scheme 2012 (ESOS 2012), which are administered through the HDFC Standard Life Employees Stock Option Trust (''''the Trust") and Employee Stock Option Scheme 2014 (ESOS 2014) and Employees Stock Option Scheme (ESOS 2015) which are directly administered by the Company. During the year, the Company has formulated Employee Stock Option Scheme 2016 (ESOS 2016) which is also directly administered by the Company. The schemes provide that eligible employees are granted options that vest in a graded manner to acquire equity shares of the Company. The options are accounted for on an intrinsic value basis in accordance with the Guidance Note on Accounting for Employee Share based Payments, issued by the Institute of Chartered Accountants of India (ICAI). The intrinsic value is the amount by which the value of the underlying share determined by an independent valuer exceeds the exercise price of an option. The intrinsic value of options, if any, at the grant date is amortised over the vesting period,

16. Provisions, contingent liabilities and contingent assets

b) present obligations that arise from past events, which are not recognized because of remote probability that an outflow of resources embodying economic benefits will be required to settle the obligations or a reliable estimate of the amounts of the obligations cannot be made,

Contingent assets are neither accounted for nor disclosed,

17. Leases

A) Finance leases

B) Operating leases

Leases where the less or effectively retains substantially all the risk and the benefits of ownership over the lease term are classified as operating leases. Leased rental payments under operating leases including committed increase in rentals are accounted for as an expense, on a straight line basis, over the non -cancellable lease period,

18. Taxation:

A) Direct tax

I) Provision for income tax

II) Deferred tax

In accordance with the provisions of the Accounting Standard (AS) 22, "Accounting for Taxes on Income", with respect to the carry forward of losses under the Income Tax regulations, the deferred tax asset is recognized only to the extent that there is a virtual certainty supported by convincing evidence that future taxable income will be available against which the deferred tax asset can be realized,

B) Indirect tax

The Company claims credit of service tax on input services, which is set off against service tax on output services. As a matter of prudence, unutilised credits towards service tax on input services are carried forward under ''Schedule 12 - Advances and Other Assets'' in the Balance Sheet, wherever there is reasonable certainty of utilization,

19. Funds for Future Appropriations

The FFA in the linked segment represents surplus on the lapsed policies issued prior to September 2010 unlikely to be revived. This surplus is required to be held within the Policyholders'' fund till the time policyholders are eligible for revival of their policies,

20. Earnings per share

In accordance with the requirement of Accounting Standard (AS) 20, "Earnings Per Share", basic earnings per share is calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares. Potential equity shares are treated as dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations,

21. Cash and cash equivalents

Cash and cash equivalents for the purposes of Receipts and Payments Account comprise of

cash and cheques in hand, bank balances, fixed deposits with original maturity of three months or less, CBLO, Reverse Repo, highly liquid mutual funds and highly liquid investments that are readily convertible into measurable amounts of cash and which are subject to insignificant risk of change in value. Receipts and Payments Account is prepared and reported using the Direct Method in accordance with Accounting Standard (AS) 3, "Cash Flow Statements" as per requirements of Para 2.2 of the Master Circular,

Statutory demands and liabilities in dispute, not provided for, relate to the show cause cum demand notices/assessment orders received by the Company from the respective tax authorities. The Company has filed appeals against the show cause cum demand notices/assessment orders with the appellate authorities and has been advised by the experts that the grounds of appeal are well supported in law in view of which the Company does not expect any liability to arise in this regard,

2. Pending litigations

The Company''s pending litigations comprise of claims against the Company primarily on account of proceedings pending with Tax authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions are required and disclosed the contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a material adverse on its financial results as at March 31, 2017. Further, refer Note 1 of Schedule 16 (B) for details on contingent liability,

3. Actuarial assumptions

a) Interest rate assumptions:

The valuation rate of interest is determined based on the expected return on existing assets, current asset mix, expected investment return on the future investment taking into consideration the asset classes mix and expected future asset mix. The interest rates used for the valuation vary according to the type and term of the product and are in the range of 5.20% to 7.35% (Previous year 5.20% to 7.00%),

b) Mortality assumptions:

Mortality assumptions are set in accordance with Clause 5(2) of Schedule II of the IRDAI (Assets, Liabilities and Solvency Margin of Life Insurance Business) Regulations, 2016, in reference to the published Indian Assured Lives Mortality table (2006-08) and are based on the latest experience analysis of the business,

In the case of annuity benefits, mortality assumption is based on the LIC Annuitants (1996-1998) table,

c) Expense assumptions:

the year (Previous year 14.42% p.a.),

4. Employee benefits A) Defined contribution plans:

During the year, the Company has recognized below amount in the Revenue Account under defined contributions

d) Persistency assumptions:

The persistency assumptions are also based on the most recent experience of the Company and vary according to the premium frequency and type of the product,

e) Provision for free-look period:

f) Bonus rates:

The bonus rates for the participating business as required to be declared in the future is based on the interest expected to be earned as per the valuation assumptions.

g) Tax:

The tax rate as applicable to insurance companies carrying on insurance business is 14.42 % p.a. for the year (Previous year 14.42% p.a.),

B) Defined benefit plans:

I. Gratuity:

a) General description of defined benefit plan

Act, 1972, to the vested employees either at retirement or on death while in employment or on termination of employment. The benefit vests after five years of continuous service. Defined benefit obligations are actuarially determined at each quarterly Balance Sheet date using the projected unit credit method as required under Accounting Standard (AS) 15 (Revised), "Employee Benefits". Actuarial gains or losses are recognized in the Revenue Account,

e) Actual return on plan assets of the Gratuity plan is a gain of Rs, 41,416 thousands (Previous year gain of Rs, 13,441 thousands).

f) The Company expects to fund Rs, 61,432 thousands (Previous year Rs, 58,826 thousands) towards the Company''s Gratuity plan during FY 2018,

II. Basis used to determine the overall expected return:

Expected rate of return on investments of the Gratuity plan is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio, along with the return on estimated incremental investments to be made during the year. Yield on the portfolio is calculated based on suitable mark-up over benchmark Government Securities of similar maturities,

5. Employee Stock Option Scheme (ESOS)

The Company has granted options to employees under the ESOS 2005, ESOS 2010, ESOS 2011 and ESOS 2012 schemes. These schemes are administered by the HDFC Standard Life Employees Stock Option Trust. The Trust had subscribed to the capital of the Company and also acquired shares of the Company from Housing Development Finance Corporation Limited, the holding company. The options are granted to the employees from these tranches of shares. The exercise price of ESOS 2005 is based on the holding cost of the shares in the books of the Trust and that of ESOS 2010, ESOS 2011 and ESOS 2012 is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI.

The Company has also granted options to its employees under the ESOS 2014 scheme, ESOS 2015 scheme and ESOS 2016 scheme. The said schemes are directly administered by the Company. The exercise price of ESOS 2014, ESOS 2015 and of ESOS 2016 schemes is based on the fair market value as determined by the Category I Merchant Banker registered with SEBI,

The Company follows the intrinsic value method of accounting for stock options granted to employees, The intrinsic value of the options issued under the above referred schemes is ''Nil'' as the exercise price of the option is the same as fair value of the underlying share on the grant date and accordingly, no expenses are recognized in the books. Had the

Company followed the fair value method for valuing its options, the charge to the Revenue Account/ Profit & Loss Account for the year would have been aggregated to Rs, 224,706 thousands (Previous year Rs, 266,023 thousands) and the profit after tax would have been lower by Rs, 122,056 thousands (Previous year Rs, 155,579 thousands). Consequently, Company''s basic and diluted earnings per share would have been Rs, 4.41 and Rs, 4.38 respectively (Previous year: Rs, 4.02 and Rs, 4.00 respectively)

Salient features of all the existing grants under the seven schemes are as stated below:

A) ESOS 2005

There are seven grants upto March 31, 2017 which are those issued on September 1, 2005 (two grants), November 8, 2006, August 3, 2007, July 15, 2008, August 16, 2009 and December 3, 2009. For all the grants the mode of settlement is through equity shares. The vested options are required to be exercised by the employees within three years from the date of vesting subject to the norms prescribed by the Nomination & Remuneration Committee. Total number of options granted upto March 31, 2017 are 9,964,650 (Previous year 9,964,650),

The exercise price of ESOS 2005 is determined based on the holding cost of the shares in the books of the Trust. This exercise price is then applicable to all options vested and available for exercise by employees for a particular quarter. Since options outstanding at the end of the year are Nil (Previous year Nil), the weighted average exercise price for options outstanding at the end of the year is not applicable and hence not disclosed. Weighted average exercise price is available only for options already exercised and this price for the current year for all grants combined is Rs, Nil per share (Previous year Rs, 26.50 per share),

The exercise price of stock options outstanding at the end of the period would depend upon the quarterly exercise price. The exercise price for the year ended March 31, 2017 is Rs, Nil per share (Previous year Rs, 26.50 per share). The weighted average remaining contractual life (comprising the vesting period and the exercise period) of options outstanding as at March 31, 2017 is Nil years (Previous year Nil years),

B) ESOS2010

There are two grants issued upto March 31, 2017 which are those issued on June 30, 2010 and October 1, 2010. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The vested options are required to be exercised by the employees within five years from the date of vesting or the date of listing of the Company on a recognized stock exchange, whichever is later, subject to the norms prescribed by the Nomination & Remuneration Committee. Hence,

it is not possible to provide the weighted average remaining contractual life of the options outstanding at the end of the year. The total number of options granted upto March 31, 2017 are 5,158,000 (Previous year 5,158,000).

There is one grant upto March 31, 2017 which was issued on October 1, 2011. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The vested options are required to be exercised by the employees within five years from the date of vesting or the date of listing of the Company on a recognized stock exchange, whichever is later, subject to the norms prescribed by the Nomination & Remuneration Committee. Hence, it is not possible to provide the weighted average remaining contractual life of the options outstanding at the end of the year. The total number of options granted upto March 31, 2017 are 4,753,000 (Previous year 4,753,000),

D) ESOS 2012

There are two grants issued upto March 31, 2017 which were on October 1, 2012 and October 1, 2013. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The vested options are required to be exercised by the employees within five years from the date of vesting or the date of listing of the Company on a recognized stock exchange, whichever is later, subject to the norms prescribed by the Nomination & Remuneration Committee,

Hence, it is not possible to provide the weighted average remaining contractual life of the options outstanding at the end of the year. The total number of options granted upto March 31, 2017 are 14,275,310 (Previous year 14,275,310).

There are two grants issued upto March 31, 2017 which were on December 1, 2014 and February 1, 2015. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The vested options have to be exercised by the employees within five years from the date of vesting or the date of listing of the Company on a recognized stock exchange, whichever is later, subject to the norms prescribed by the Nomination &

Remuneration Committee. Hence, it is not possible to provide the weighted average remaining contractual life of the options outstanding at the end of the year, The total number of options granted upto March 31, 2017 are 15,034,250 (Previous Year 15,034,250).

F) ESOS 2015

There are two grants issued as of March 31, 2017 which were on October 1, 2015 and November 1,

2015. For all the grants, the mode of settlement is through equity shares. All the grants have graded vesting. The vested options have to be exercised by the employees within five years from the date of vesting or the date of listing of the Company on a recognized stock exchange, whichever is later, subject to the norms prescribed by the Nomination & Remuneration Committee. Hence,

it is not possible to provide the weighted average remaining contractual life of the options outstanding at the end of the year. Total number of options granted till March 31, 2017 are 9,733,300 (Previous Year 9,733,300).

*Volatility of a matured enterprise in the industry which is listed on BSE has been used as a basis for estimation of expected volatility of options. In the case of ESOS 2016, the expected volatility has been assumed at the rate of 10% since the Company is unlisted,

6. Managerial remuneration

The managerial remuneration for the year includes perquisite value as per Income Tax Act, 1961 of employee stock options exercised and does not include the actuarially valued employee benefits that are accounted as per Accounting Standard (AS) 15 (Revised), "Employee Benefits" that are determined on an overall Company basis. Managerial remuneration in excess of the prescribed limits by the IRDAI has been charged to the Shareholder''s Profit and Loss Account,

7. Remuneration payable to non-whole time independent directors Rs, 8,000 thousands (Previous year Rs, 4,000 thousands) is included under Schedule 3A under the head "Directors Commission"

10.Leases

In accordance with the Accounting Standard (AS) 19, "Leases", the following disclosures are made in respect of operating leases:

a) The Company has hired motor vehicles on cancellable operating lease for a term of up to five years. In respect of these operating leases, the lease rentals debited to the Revenue Account are '' 4,856 thousands (Previous year '' 6,544 thousands).

The terms of the lease agreements do not contain any exceptional/restrictive covenants which will have significant detrimental impact on the Company''s financials nor are there any options given to the Company to purchase the motor vehicles. The agreements provide for predecided increase in lease rentals over the lease period and for change in the rentals if the taxes leviable on such rentals are revised,

The lease arrangements contain provisions for renewal and escalation. The terms of the lease agreements do not contain any exceptional/ restrictive covenants which will have significant detrimental impact on the Company''s financials,

c) The Company has taken furniture and generators under cancellable operating lease. In respect of these operating leases, the lease rentals debited to rent in the Revenue Account are Rs, 19,872 thousands (Previous year Rs, 22,333 thousands),

11. Provision for tax

During the year, the Company has made provision for tax (net) amounting to Rs, 1,739,873 thousands (Previous year Rs, 1,911,440 thousands), Rs, 1,519,776 thousands charged to the Revenue Account (Previous year Rs, 1,745,512 thousands) and Rs, 220,097 thousands charged to the Profit and Loss Account (Previous year Rs, 165,928 thousands), in accordance with the Income Tax Act, 1961 and Rules and Regulations there under as applicable to the Company.

12. Foreign exchange gain/(loss)

The amount of net foreign exchange gain credited to Revenue Account is Rs, 1,080 thousands (Previous year net foreign exchange loss debited to Revenue Account is Rs, 3,553 thousands) included in Schedule 3 -Operating expenses related to insurance business,

13. Corporate Social Responsibility (CSR)

As per section 135 of the Companies Act, 2013, the gross amount suggested to be spent by the Company during the year ended March 31, 2017 is Rs, 108,700 thousands (Previous year Rs, 110,165 thousands). The Company has spent Rs, 109,100 thousands (Previous year Rs, 48,033 thousands) on various CSR initiatives.

14. Derivative contracts:

In accordance with the IRDAI circular no. IRDA/ F&I/INV/CIR/138/06/2014 dated June 11, 2014 (''the IRDAI circular on Interest Rate Derivatives'') allowing insurers to deal in rupee interest rate derivatives, the Company has in place a derivative policy approved by Board which covers various aspects that apply to the functioning of the derivative transactions undertaken to substantiate the hedge strategy to mitigate the interest rate risk, thereby managing the volatility of returns from future fixed income investments, due to variations in market interest rates,

a) The Company has during the year, as part of its Hedging strategy, entered into exchange traded Interest Rate Future (IRF) transactions to hedge the interest rate sensitivity for highly probable forecasted transactions as permitted by the IRDAI circular on Interest Rate Derivatives,

An amount of '' Nil (Previous year Rs, Nil) was recognized in Revenue Account being the portion of gain/loss determined to be ineffective,

Amount that was removed from Hedge Reserve account during the year ended March 31, 2017 in respect of forecast transaction for which hedge accounting had previously been used, but is no longer expected to occur is Rs, 243,569 thousands (Previous year Rs, Nil),

The cash flows from the hedges are expected to occur over the outstanding tenure of underlying policy liabilities and will accordingly flow to the Revenue Account,

Qualitative Disclosures on risk exposure in Fixed

Income Derivatives:

Overview of business and processes:

a) Fixed Income Derivative Hedging instruments: Derivatives are financial instruments whose characteristics are derived from the underlying assets, or from interest and exchange rates or indices, These include forward rate agreements, interest rate swaps and interest rate futures,

The Company uses derivative instrument (IRF) to minimise exposure to fluctuations in interest rates on plan assets and liabilities. This hedge is carried in accordance with its established policies, goals and applicable regulations. The Company does not engage in derivative transactions for speculative purposes,

b) Derivative policy/process and Hedge effectiveness assessment:

c) Scope and nature of risk identification, risk measurement, and risk monitoring:

i) Roll over risk

Futures contracts traded in the markets usually expire in 1-3 months. Since the period for which the hedge is established is longer, it necessitates frequent roll-overs from contracts approaching expiry into new contracts. Roll over risk is the cost involved in rolling over futures contracts, The financial impact of this risk can be reduced by actively managing the roll-over from existing contracts into new contracts,

ii) Basis Risk

Basis risk is the risk arising out of a mismatch in the tenure of the risk to be hedged and the tenure of available interest rate future contracts, The financial impact of this risk can be reduced to some extent by purchasing futures contracts so as to match the tenure of the risk to be hedged,

All financial risks of the derivative portfolio are measured and monitored on periodic basis,

Quantitative disclosure on risk exposure in Exchange Traded Interest Rate Futures

A hedge is deemed effective, if it has a high statistical correlation between the change in value of the hedged item and the hedging instrument (IRF). Gains or losses arising from hedge ineffectiveness, if any, are recognized in the Revenue Account,

The tenure of the hedging instrument may be less than or equal to the tenure of underlying hedged asset/liability,

Notes-

1. As per the hedging strategy, the derivatives exposure required as at March 31, 2017 is Nil.

2. ^A This represents a part of the portfolio targeted to be hedged.

3. Method & Assumptions:

a. Term structure of interest rates: Source - Clearing Corporation of India Limited official website,

b. Methodology for computation of PV01:

1. Discounted cash flow method,

2. Flat cut of 1 bps in the current term structure of interest rates.

4. The notional principal amount of derivatives reflect the volume of transactions outstanding as at the Balance Sheet date and do not represent the amounts at risk,

5. The Company evaluates the industry exposure limit for exchange traded IRFs against the Central Counter Party i.e. Clearing Corporation in line with the IRDAI circular on Interest Rate Derivatives,

The industry exposure limit has been calculated on the basis of Credit Equivalent Amount using the Current Exposure Method (CEM) as detailed below:

The Credit Equivalent Amount of a market related off-balance sheet transaction calculated using the CEM is the sum of

a) the current credit exposure (gross positive mark to market value of the contract); and

15. Encumbrances

The assets of the Company are free from any encumbrances at March 31, 2017, except for Fixed Deposits and Government Securities, mentioned below, kept as margin against bank guarantees with exchange and collateral securities issued:

In the current year, the investments reported above in non-linked investments include unlisted equity shares valued at cost of Rs, 5,077,431 thousands (Previous Year Rs, 4,617,520 thousands) and equity shares awaiting listing having carrying value of Rs, Nil (Previous Year Rs, 166,736 thousands). The investments reported above in Linked investments includes unlisted equity shares awaiting listing having carrying value of Rs, Nil (Previous year Rs, 1,233,284 thousands),

17. Basis of revaluation of investment property

The Company does not have any investment property as of March 31, 2017 and as of March 31, 2016.

18. Commitments made and outstanding for loans, investments and fixed assets

The estimated amount of commitments made and not provided for (net of advances) as at March 31, 2017 on account of investments is Rs, 873,648 thousands (Previous year Rs, 351,480 thousands) and estimated amount of commitments made and not provided for (net of advances) as at March 31, 2017 on account of fixed assets is Rs, 126,515 thousands (Previous year Rs, 199,018 thousands).

19. During the year ended March 31, 2017, the Company received an order from IRDAI, Order No IRDA/F&I/ ORD/DATA/110/06/2016 dated June 3, 2016, on the

matter relating to certain property assets. As a result

of compliance with the said order,

a) The Company has transferred funds from Shareholders'' funds to Policyholders'' funds, towards the value of property, as on the date of transfer, basis independent valuer''s report, at cost or market value, whichever is higher, amounting to Rs, 655,298 thousands (transfer value) and interest compounded annually at the prevailing interest rate on saving bank account, amounting to Rs, 122,145 thousands calculated on the transfer value, for the period from the date of transfer to the date of infusion of funds in to Policyholders'' fund. The interest has been charged to Shareholders'' Profit & Loss Account, and credited to ''Other income'' in Policyholders'' in Revenue Account,

b) Revaluation reserve earlier created on revaluation of an investment property has been unwound and adjusted against the revalued amount of the said property which was reclassified from investment to fixed asset. Consequently, the property included under Fixed Assets-Buildings in Balance Sheet is lower by Rs, 556,964 thousands, accumulated depreciation is lower by Rs, 78,227 thousands and depreciation in Revenue Account is lower by Rs, 21,755 thousands resulting into profit for the year being higher by Rs, 13,451 thousands,

21. Claims outstanding

As at March 31, 2017, there were 105 claims amounting to Rs, 20,755 thousands (Previous year 314 claims amounting to Rs, 49,576 thousands) settled and remaining unpaid for a period of more than six months, These claims remain unpaid awaiting receipt of duly executed discharge documents from the claimants. All claims are to be paid to claimants in India,

22. Provision for NPA (non standard assets) for debt portfolio

Provision for doubtful debts is made In line with the ''Guidelines on Prudential norms for income recognition, Asset classification, Provisioning and other related matters in respect of Debt portfolio as specified by IRDAI vide the Master Circular dated December 11, 2013. During the year, there is a reversal of provision for doubtful debt recognized in earlier years amounting to '' 58,240 thousands in the Revenue Account (Previous year provision at 100% of unsecured portion and 40% of secured portion amounting to Rs, 53,674 thousands) due to transfer of assets to Shareholders'' Fund being "Other investments" as required under IRDAI (Investment) Regulations 2016,

23. Segmental reporting

As per Accounting Standard (AS) 17, "Segment Reporting", read with the IRDAI Financial Statements Regulations, Segmental Accounts are disclosed in Annexure 1.

24. Shareholders'' contribution

Shareholders'' contribution of Rs, 353,890 thousands to the Policyholders'' account for the current year (Previous year Rs, 380,041 thousands), subject to approval by shareholders at the Annual General Meeting is irreversible in nature and will not be recouped to the shareholders,

Shareholders'' contribution of Rs, 380,041 thousands to the Policyholders'' account for the previous year has been approved by shareholders at the Annual General Meeting held on July 14, 2016,

25. Unit linked funds

The Company has presented the financial statements of the unit linked funds in Annexure 2 and 3 as required by the Master Circular,

26. The Micro, Small and Medium Enterprises Development Act, 2006

27. Earnings per equity share

purpose of calculating diluted earnings per share, the net profit or loss for the year attributable to equity shareholders and the weighted average number of equity shares outstanding during the year are adjusted for effects of all dilutive equity shares,

28. Subsidiaries:

The Company has two subsidiaries, for which information is given as under:

i. HDFC Pension Management Company Limited (''HDFC Pension'') is a wholly owned subsidiary of the Company. HDFC Pension is a public limited company domiciled in India and incorporated under the provision of the erstwhile Companies Act, 1956 on June 20, 2011 with the purpose of managing pension fund business. The Company has received a ''Letter of Appointment'' to act as a Sponsor of HDFC Pension from the Pension Fund Regulatory Development Authority (PFRDA) by virtue of order of Hon''ble High Court of Delhi dated December 18, 2014 for the purpose of managing pension asset under National Pension System for private sector, HDFC Pension presently continues to carry on its business in the normal course. However, the PFRDA has filed Special Leave Petition in the Hon''ble Supreme Court of India, challenging the said order of the Hon''ble High Court of Delhi. The Hon''ble Supreme Court of India has refused to grant the PFRDA any ad-interim relief and the matter is presently pending hearing. Further, the PFRDA (Pension Fund) Regulations,

2015 were notified in May 2015, pursuant to which re-registration of all pension funds was sought by the PFRDA. HDFC Pension has submitted its application for the same and a response from the PFRDA is awaited. However, vide a letter dated June 24, 2016, the PFRDA, while acknowledging our submission of Annual Fees, had granted an extension to continue as a Pension Fund until the selection of pension funds in terms of process specified under PFRDA (Pension Fund) Regulations, 2015. This extension was subject to the Order of the Supreme Court of India on the appeal filed against the Order of the High Court of Delhi. During the year, the PFRDA had issued a fresh Request For Proposal (''RFP'') for selection of Pension Funds for private sector, pursuant to which Sponsor had submitted a Technical and Commercial bid. On November 29, 2016 the

PFRDA issued a notice that the Commercial Bid would be opened on November 30, 2016 wherein the name of the Company was included which implies that the Technical Bid of the Company has been accepted. HDFC Pension is also given to understand that the Commercial Bid submitted by the Company has also been accepted by the PFRDA and formal issuance of letters of appointment is awaited,

ii. ''HDFC International Life and Re Company Limited'' is a wholly owned foreign subsidiary incorporated in Dubai on January 10, 2016 under the DIFC (Dubai International Finance Centre) Companies Law No. 2 of 2009 under registration number 2067. HDFC International Life & Re Company is regulated by the Dubai Financial Services Authority ("DFSA") and is licensed to undertake life reinsurance business in the UAE, In future, the Company intends to also undertake life insurance business in other jurisdictions, with necessary regulatory permissions and approvals,

29. Interim Dividend

During the year ended March 31, 2017, the Board of Directors of the Company has approved vide circular resolution dated, December 15, 2016 an interim dividend at 11% (Previous year at 9%) on equity share of the face value of Rs, 10 i.e. Rs, 1.10 per equity share (Previous year Rs, 0.90 per share) amounting to Rs, 2,644,762 thousands (including dividend distribution tax), (Previous year Rs, 2,160,947 thousands).

30. Related party & other group company disclosures

During the year ended March 31, 2017, the Company had transactions with related parties, which have been identified by the management as per the requirements of the Accounting Standard (AS) 18, "Related Party Disclosures". Details of these related parties, nature of the relationship, transactions entered into with them and the balances in related party accounts at year end, are as mentioned below:

A) Related party disclosures as per Accounting Standard 18 Related parties and nature of relationship

Nature of relationship	Name of the related party
Holding Company	1)	Housing Development Finance Corporation Limited (HDFC Limited)
Investing Company	2)	Standard Life (Mauritius Holdings) 2006 Limited
Wholly Owned Subsidiary	3)	HDFC Pension Management Company Limited
	4)	HDFC International Life and Re Company Limited
Fellow Subsidiary	5)	HDFC Asset Management Company Limited
	6)	HDFC Developers Limited
	7)	HDFC Holdings Limited
	8)	HDFC Trustee Company Limited
	9)	HDFC Realty Limited
	10)	HDFC Investments Limited
	11)	HDFC ERGO General Insurance Company Limited
	12)	GRUH Finance Limited
	13)	HDFC Sales Private Limited
	14)	HDFC Venture Capital Limited
	15)	HDFC Ventures Trustee Company Limited
	16)	HDFC Property Ventures Limited
	17)	Credila Financial Services Private Limited
	18)	HDFC Capital Advisors Limited
	19)	Griha Investments (subsidiary of HDFC Holdings Limited)
	20)	HDFC Education and Development Services Private Limited
	21)	Griha Pte Ltd., Singapore (Subsidiary of HDFC Investments Limited)
	22)	HDFC General Insurance Company Limited (Subsidiary of HDFC Ergo General Insurance Company Limited)
	23)	Windermer Properties Private Limited
	24)	Grandeur Properties Private Limited
	25)	Winchester Properties Private Limited
	26)	Pentagram Properties Private Limited
	27)	Haddock Properties Private Limited
Entities over which control is exercised	28)	HDFC Investment Trust
Entities over which control is exercised	29)	HDFC Investment Trust II
Key Management Personnel	30)	Mr. Amitabh Chaudhry - Managing Director and Chief Executive Officer
	31)	Ms. Vibha Padalkar - Executive Director and Chief Financial Officer
Relative of Key Management	32)	Mr. Umesh Padalkar (relative of Ms. Vibha Padalkar)
Personnel	33)	Ms. Preeti Chaudhry (relative of Mr. Amitabh Chaudhry)
	34)	Ms. Chhavi Kharb (relative of Mr. Amitabh Chaudhry)

Solvency ratio has been stated on the basis of computation certified by Appointed Actuary and it excludes inadmissible assets as required by the IRDAI (Assets, Liabilities and Solvency Margin of Insurers) Regulations, 2016 and directions received from IRDAI from time to time,

9. Impairment of assets

In accordance with the Financial Statements Regulations, Schedule A Part I on Accounting Principle for Preparation of Financial Statements on procedure to determine the value of investment and the relevant circular, the impairment in value of investments other than temporary diminution has been assessed as at March 31, 2017 and accordingly impairment provisions have been provided as below,

Listed equity shares

A provision for impairment loss of Rs, 99,499 thousands (Previous year reversal of impairment loss of Rs, (20,437) thousands) has been recognized in Revenue Account and reversal of impairment loss of Rs, (43,443) thousands (Previous year provision for impairment loss Rs, 10,807 thousands) in the Profit and Loss Account under the head "Provision for diminution in the value of investments". Correspondingly, PolicyholdersRs, Fair Value Change Account under Policyholders'' Fund and Shareholders'' Fair Value Change Account under Shareholders'' Funds in the Balance Sheet have been adjusted for such provision/reversal of impairment loss by Rs, 99,499 thousands (Previous year Rs, (20,437) thousands) and Rs, (43,443) thousands (Previous year Rs, 10,807 thousands) respectively,

Security Receipts and Venture Fund

A provision for impairment loss of Rs, 22,940 thousands (Previous year Rs, Nil) has been recognized in Revenue Account and reversal of impairment loss Rs, (56) thousands (Previous year provision for impairment loss Rs, 21,826 thousands) in the Profit and Loss Account under the head "Provision for diminution in the value of investments". Correspondingly, Short Term Other than Approved Investments under Schedule 8A (Policyholders Investments) has been adjusted for such diminution by Rs, 22,940 thousands (Previous year Rs, Nil) and Short term other than Approved investment under Schedule 8 (Shareholders'' Investments) has been adjusted for such diminution by '' (56) thousands (Previous year Short term other than Approved Investments '' 21,826 thousands) respectively,

17. On August 8, 2016, the Board of Directors of HDFC Standard Life Insurance Company Limited ("HDFC Life"), Max Life Insurance Company Limited ("Max Life"), Max Financial Services Limited ("Max Financial") and Max India Limited ("Max India") at their respective board meetings, approved entering into definitive agreements for the amalgamation of the businesses between the above entities through a composite Scheme of Arrangement ("Scheme"). As part of the Scheme, Max Life would be merged with Max Financial, and subsequently the life insurance business of Max Financial will be demerged and amalgamated with HDFC Life and the residual Max Financial will be merged into Max India Limited. The shares of HDFC Life are proposed to be listed on Stock Exchange(s) in India, as a consequence of the Scheme. HDFC Ltd. and Standard Life will continue to be the promoters of the merged entity,

HDFC Life and Max Life have filed an application seeking in-principle approval of the Insurance Regulatory and Development Authority of India ("IRDAI") for the Scheme on September 21, 2016 and have also filed requisite applications with Competition Commission of India (CCI). Max Financial and Max India have made filings with the relevant stock exchanges / Securities and Exchange Board of India (SEBI).

The IRDAI, vide its letter dated November 11, 2016 had expressed certain reservations on the proposed Scheme. The Company believes that the Scheme is in compliance with all the applicable laws and has accordingly furnished necessary representations to the IRDAI clarifying on the matter. The Company is currently awaiting further directions / approval from the IRDAI.

The closing of the proposed transaction will be subject to aforesaid approval of the IRDAI, as well as other applicable approvals including the CCI, the SEBI, relevant stock exchanges and the National Company Law Tribunal (NCLT), pending which the effects of the above Scheme are not required to be considered in these financial statements.

18. In accordance with the IRDAI (Investment) Regulations 2016 and IRDAI circular IRDA/ F&I/INV/CIR/062/03/2013 dated March 26, 2013, the Company has declared March 31, 2017 as a business day. NAV for all unit linked funds were declared on March 31, 2017. All applications received till 3 PM on March 31, 2017, were processed with NAV of March 31, 2017, Applications received after this cut-off for unit linked funds are taken into the next financial year,

19. Details of Specified Bank Notes (SBN) held and transacted during the period from November 8, 2016 to December 30, 2016, as per notification issued by Ministry of Corporate Affairs (MCA) dated March 30, 2017, is not disclosed as this disclosure is required only for companies to which Schedule III of the Companies Act, 2013 is applicable,

20. Long term contracts

The Company has a process whereby periodically all long term contracts are assessed for material foreseeable losses. At the year end, the Company has reviewed and ensured that adequate provisions as required under any law/accounting standard for material foreseeable losses on such long term contracts including derivative contracts has been made in the financial statements.

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