Housing Development Finance Corporation

1 The Corporation has availed a loan of USD 100 million from the Asian
 Development Bank (Loan II). In respect of tranches 1 and 2 aggregating
 to USD 60 million, as per agreements with a scheduled bank, the
 Corporation has handed over the dollar funds to the bank overseas and
 has obtained rupee funds in India amounting to Rs. 200 crores by way of
 a term loan and Rs. 100 crores through the issue of bonds which have
 been subscribed by the bank.
 
 In respect of tranche 3 of USD 40 million, as per an agreement with a
 financial institution, the Corporation has handed over the dollars to a
 financial institution overseas and under a back-to-back arrangement
 obtained rupee funds in India. All payments in foreign currency are the
 responsibility of the financial institution.
 
 In terms of the agreements, the Corporations foreign exchange
 liability is protected.
 
 2 (i) The Corporation had raised USD 500 million through the issue of
 zero coupon Foreign Currency Convertible Bonds (FCCBs). The bonds are
 convertible at any time into equity shares of the Corporation of face
 value of Rs. 10 each from August 24, 2006 upto July 29, 2010, at the
 option of the holders, at Rs. 1399.148 per equity share representing a
 conversion premium of 50% over the initial reference share price. The
 premium payable on redemption of the bonds is charged to the Securities
 Premium Account over the life of the bonds. The bonds are redeemable on
 September 27, 2010 with a yield to maturity of 4.62% per annum. Upto
 March 31, 2009, 77.88% (Previous Year 76.38%) of the Bonds amounting to
 USD 389.40 million (Previous Year USD 381.90 million) representing
 1,21,67,765 (Previous Year 1,19,33,410) Equity shares, have been
 converted pursuant to the exercise of options by the bondholders of the
 Corporation. The Corporation has undertaken currency options and
 forward contracts amounting to USD 110.60 million (Previous Year Nil)
 to cover the net foreign currency exposure in the outstanding FCCBs.
 
 (ii) As on March 31, 2009, the Corporation has foreign currency
 borrowings (excluding FCCBs) of USD 984.62 million equivalent (Previous
 Year USD 1,079.58 million). The Corporation has undertaken principal
 only swaps, currency options and forward contracts on a notional amount
 of USD 892.86 million equivalent (Previous Year USD 808 million) to
 hedge the foreign currency risk. Further, interest rate swaps on a
 notional amount of USD 215 million equivalent (Previous Year USD 230
 million) are outstanding, which have been undertaken to hedge the
 interest rate risk on the foreign currency borrowings. As on March 31,
 2009, the Corporations net foreign currency exposure on borrowings net
 of risk management arrangements is Nil (Previous Year USD 447.13
 million).
 
 As a part of asset liability management and on account of the
 increasing response to the Corporations Adjustable Rate Home Loan
 product as well as to reduce the overall cost of borrowings, the
 Corporation has entered into interest rate swaps wherein it has
 converted its fixed rate rupee liabilities of a notional amount of Rs.
 11,815 crores (Previous Year Rs. 12,265 crores) as on March 31, 2009
 for varying maturities into floating rate liabilities linked to various
 benchmarks. In addition, the Corporation has entered into cross
 currency swaps of a notional amount of USD 733 million equivalent
 (Previous Year USD 652 million) wherein it has converted its rupee
 liabilities into foreign currency liabilities and the interest rate is
 linked to the benchmarks of respective currencies.
 
 (iii) Monetary assets and liabilities in foreign currencies net of risk
 management arrangement are revalued at the rate of exchange prevailing
 at the year end. Cross currency swaps have been marked to market at the
 year end. For forward contract or instruments that are in substance,
 forward exchange contracts, the exchange differences on such contracts
 are being amortised over the life of contracts. Loss on mark to market
 of cross currency interest rates swaps is recognised in the Profit and
 Loss Account and the net gains is not recognised keeping in view the
 principles of prudence as enumerated in Accounting Standard (AS1)
 notified by the Companies (Accounting Standards) Rules, 2006.
 
 The amount of exchange difference in respect of such contracts to be
 recognised as expense in the Profit and Loss Account over subsequent
 accounting periods is Rs. 761.73 crores (Previous Year Rs. 97.78
 crores). The period is ranging upto 3 years.
 
 (iv) A net loss of Rs. 261.16 crores has been recognised in the Profit
 and Loss Account being net loss on year end translation of foreign
 currency monetary assets and liabilities and mark to market loss on
 derivatives as shown below:
 
                                                           Rs. in Crores
  
 Amortisation of premium on Options and 
 forward contracts                                                326.64
 
 Net Gain on translation of foreign 
 currency denominated assets and
 foreign currency borrowings                                     (117.99)
 
 Mark to market loss on derivatives 
 (cross currency interest rates swaps, etc.)          346.10
 
 Gain on derivatives revaluation not 
 recognised in the previous year                     (293.59)
 
                                                                   52.51
 
                                                                  261.16
 
 In the previous year, the net gain on year end translation of foreign
 currency monetary assets and liabilities amounting to Rs. 8.67 crores
 was credited to Provision for Contingencies Account and gain on mark to
 market of derivatives amounting to Rs. 293.59 crores was included under
 Advance Payments (Schedule 7 ) and not recognised in the Profit and
 Loss account.
 
 3 (i) Out of the total Bonds issued by the Corporation, Bond
 certificates aggregating to Rs. 150.00 crores (Previous Year Rs. 147.33
 crores) have been purchased under a buy-back arrangement.  These
 certificates have been kept alive for the purpose of re-issue.  (ii)
 The maximum amount of Commercial Paper outstanding at any time during
 the year was Rs. 7,055 crores (Previous Year Rs. 6,150 crores).
 
 4 Save and except the floating charge created in favour of the
 depositors in respect of public deposits as defined in Paragraph
 2(1)(w) of the Housing Finance Companies (NHB) Directions, 2001, on the
 Statutory Liquid Assets maintained in terms of sub-sections (1) & (2)
 of Section 29B of the National Housing Bank Act, 1987;
 
 (i) Loans are secured by Promissory Notes and/or a negative lien on all
 the assets of the Corporation.
 
 (ii) Bonds are in the nature of Promissory Notes and are secured by a
 negative lien on all the assets of the Corporation.
 
 (iii) Non-Convertible Debentures amounting to Rs. 32,394.90 crores
 (Previous Year Rs. 32,552.90 crores) are secured by a negative lien on
 all the assets of the Corporation and by a mortgage. These Debentures
 are redeemable at par between 2009 and 2019.
 
 5 As at March 31, 2009, the Corporations outstanding subordinated debt
 is Rs. 1,375 crores (Previous Year Rs. 1,375 crores). These Debentures
 are redeemable at par between 2011 and 2017. The debt is subordinated
 to present and future senior indebtedness of the Corporation and
 qualifies as Tier II capital under National Housing Bank (NHB)
 guidelines for assessing capital adequacy. Based on the balance term to
 maturity as at March 31, 2009, 82.55% (Previous Year 88.36%) of the
 book value of the subordinated debt is considered as Tier II capital
 for the purpose of capital adequacy computation.
 
 6 (i) Loan Funds include Rs. 11,02,45,311 (Previous Year Rs.
 3,00,11,833) from Directors.
 
 (ii) Deposits include Rs. 11,339.58 crores (Previous Year Rs. 5,950.98
 crores) due within one year.  (iii) Deposits include Rs. 31,85,25,000
 (Previous Year Rs. 11,62,00,000) due to subsidiary companies.
 
 7 (i) Loans granted by the Corporation are secured or partly secured by
 :
 
 (a) Equitable mortgage of property and / or
 
 (b) Pledge of shares, units, other securities, assignment of life
 insurance policies and / or
 
 (c) Hypothecation of assets and / or
 
 (d) Bank guarantees, company guarantees or personal guarantees and / or
 
 (e) Negative lien and / or
 
 (f) Assignment of hire purchase receivables and / or
 
 (g) Undertaking to create a security.
 
 (ii) In respect of loans aggregating to Rs. 135.81 crores (Previous
 Year Rs. 200.00 crores), the Corporation has been assigned the right to
 future receivables along with a power of attorney authorising the
 Corporation, inter-alia, to obtain possession of the property in case
 of default.
 
 (iii) Loans include Rs. 33.41 crores (Previous Year Rs. 29.34 crores)
 in respect of properties held for disposal under Securitisation and
 Reconstruction of Financial Assets and Enforcement of Security Interest
 Act, 2002.
 
 8 (i) There are no Sundry Debtors which are outstanding for a period
 over six months. Sundry Debtors include amounts due from subsidiary
 companies Rs. 26,35,28,986 (Previous Year Rs. Nil).
 
 (ii) Cash and cash equivalents represents:
 
                                                  As at            As at
 Particulars                             March 31, 2009   March 31, 2008
                                                 Rupees           Rupees
 
 Cash and Bank Balances 
 (As per Schedule 6)                      1718,54,18,511   777,73,50,502
 
 Current Accounts held for 
 Unclaimed Dividends                        (6,51,67,608)   (5,57,77,075)
 
 Exchange difference on Cash 
 and cash equivalents                      (16,41,67,992)    5,60,23,700
 
 Cash and cash equivalents as 
 at the end of the year                   1695,60,82,911   777,75,97,127
 
 (iii) Bank Balance with Non-Scheduled Banks:
 
                                  Balance as on          Maximum amount
 Name of the Bank                March 31, 2009      outstanding at any
                                                   time during the year
                                         Rupees                  Rupees
 
 HSBC Bank Plc., London                5,73,815               17,01,767
 
 DBS Bank Ltd., Singapore             11,88,569               34,34,176
 
 Total                                17,62,384
 
 (iv) Out of the total Loans and Advances (Schedule 6), amounts
 aggregating to Rs. 1308,61,64,094 (Previous Year Rs. 2009,01,37,119)
 are secured.
 
 Advances recoverable in cash or in kind includes Advance Tax ( net of
 Provision for Taxation) Rs. 308,20,48,742 (Previous Year Rs.
 255,52,93,512), Rs. 13,67,82,110 (Previous Year Rs. 40,39,56,631)
 towards advances of capital nature, and Rs. 98,58,546 (Previous Year
 Rs. 45,78,140) due from subsidiary companies.
 
 (v) Corporate Deposits includes Rs. 402,05,00,000 (Previous Year Rs.
 3,50,00,000) due from subsidiary companies.  (vi) Interest Accrued on
 Deposits includes Rs. 12,15,36,986 (Previous Year Rs. 49,863) due from
 subsidiary companies.
 
 9 (i) Sundry Creditors include Rs. Nil (Previous Year Rs. 4,15,000)
 payable to Suppliers registered under the Micro,
 
 Small and Medium Enterprises Development Act, 2006. No interest has
 been paid / payable by the Corporation during the year to the
 Suppliers covered under the Micro, Small and Medium Enterprises
 Development Act, 2006. The above information takes into account only
 those suppliers who have responded to the inquiries made by the
 Corporation for this purpose.
 
 (ii) As required under Section 205C of the Companies Act, 1956, the
 Corporation has transferred Rs. 64,07,098 (Previous Year Rs. 72,93,466)
 to the Investor Education and Protection Fund (IEPF) during the year.
 As of March 31, 2009, no amount was due for transfer to the IEPF.
 
 (iii) Sundry Creditors includes Rs. 4,03,09,035 (Previous Year Rs.
 4,04,85,998) due to a subsidiary company.
 
 (iv) Interest Accrued but not due includes Rs. 4,79,84,021 (Previous
 Year Rs. Nil) due to Subsidiary Companies and Rs. 47,78,652 (Previous
 Year Rs. 12,08,845) due to the Directors of the Corporation.
 
 10 Estimated amount of contracts remaining to be executed on capital
 account and not provided for (net of advances) is Rs. 279.03 crores
 (Previous Year Rs. 342.22 crores).
 
 11 (i) Exceptional Items comprises of net profit on sale of investments
 amounting to Rs. Nil [Previous Year
 
 Rs. 636,26,27,006 on account of sale of shares of HDFC Standard Life
 Insurance Company Ltd. (Subsidiary Company), HDFC General Insurance
 Company Ltd. [erstwhile HDFC Chubb General Insurance Company Ltd.]
 (Subsidiary Company), HDFC Investments Ltd. (Subsidiary Company) and
 Intelenet Global Services Pvt. Ltd.  (Joint Venture)].
 
 (ii) Profit on sale of investments includes profit of Rs. Nil (Previous
 Year Rs. 64,50,000) in respect of investments held as current
 investments.
 
 (iii) Surplus from deployment in Cash Management Schemes of Mutual
 Funds amounting to Rs. 157,97,31,748 (Previous Year Rs. 111,77,55,103)
 is in respect of investments held as current investments.
 
 (iv) Dividend income includes Rs. 108,22,75,140 (Previous Year Rs.
 15,21,38,472) received from subsidiary companies.
 
 (v) Other Interest includes Interest on Investments amounting to Rs.
 146,24,59,036 (Previous Year Rs. 127,40,37,226), including Rs.
 14,51,81,576 (Previous Year Rs. 9,48,61,383) in respect of current
 investments.
 
 (vi) In accordance with the Guidance Note on accounting for Leases
 issued by the Institute of Chartered Accountants of India, an amount of
 Rs. 2,17,27,220 (Previous Year Rs. Nil) towards Lease Equalisation has
 been reduced from Income from Leases, in respect of Leases entered
 prior to the applicability of Accounting Standard on Leases (AS 19)
 notified by the Companies (Accounting Standards) Rules, 2006.
 
 12 Other Income includes rent of Rs. 12,65,82,207 (Previous Year Rs.
 9,71,18,683), of which Rs. 24,00,000 (Previous Year Rs. 22,40,679) is
 in respect of rent for certain assets given on operating lease and also
 includes sub-lease payments received Rs. 1,54,26,000 (Previous Year Rs.
 1,20,91,994) in respect of a property acquired under operating lease as
 per Note 24(ii).
 
 13 (i) Earnings in foreign currency (Cash basis):
 
                                         Current year      Previous Year
                                               Rupees             Rupees
 
 Interest on Bank Deposits                9,98,63,287       13,16,10,504
 
 Consultancy and other fees               8,04,03,010        4,50,36,750
 
 (ii)  Expenditure in foreign currency (Cash basis):
 
                                         Current year      Previous Year
                                               Rupees             Rupees
 
 Interest and Other Charges on Loans     85,77,77,714      115,47,94,614
 
 Others                                   9,35,27,098        8,20,05,041
 
 14 (i) Expenditure shown in Schedule 11 is net of recovery from
 subsidiary companies in respect of Salaries Rs. 1,32,05,916 (Previous
 Year Rs. 1,94,19,103) and Staff Welfare Expenses Rs. Nil (Previous Year
 Rs. 3,375).  Expenditure shown in Schedule 12 is net of recovery from
 subsidiary companies, in respect of Rent Rs. Nil (Previous Year Rs.
 56,250) and Electricity Charges Rs. Nil (Previous Year Rs. 78,671).
 Expenditure shown in Schedule 13 is net of recovery from subsidiary
 companies, in respect of Repairs and Maintenance – Other than Buildings
 Rs. Nil (Previous Year Rs. 52,740) and Office Maintenance Rs. Nil
 (Previous Year Rs. 40,237).
 
 (ii) Miscellaneous Expenses under Schedule 13 exclude Rs. 5,21,59,522
 (Previous Year Rs. 5,42,68,159) in respect of amounts utilised out of
 Shelter Assistance Reserve during the year.
 
 15 (i) The Corporation has only one reportable segment of business viz.
 Housing Finance business for the purposes of paragraph 25(2) of the
 Housing Finance Companies (NHB) Directions, 2001 and all other
 activities revolve around the main business of Housing Finance.
 
 (ii) As per the Housing Finance Companies (NHB) Directions, 2001,
 non-performing assets are recognised on the basis of ninety days
 overdue. The total provision carried by the Corporation in terms of
 paragraph 25 (2) of the Housing Finance Companies (NHB) Directions,
 2001 and NHB circular NHB(ND)/DRS/Pol-No.09/2004-05 dated May 18, 2005
 in respect of Housing and Non-Housing Loans is as follows:
 
                                                           Rs. in crores 
                    Sub-Standard Assets            Doubtful Assets
 Particulars   Current Year  Previous Year   Current Year  Previous Year
 
 Housing              70.90          19.17         101.83         105.98
 
 Non-Housing          32.79           8.12           8.42           7.02
 
 (iii) During the year, in addition to the charge of Rs. 50 crores
 (Previous Year Rs. 32 crores) to the Profit and Loss Account an amount
 of Rs. 118.82 crores (net of Deferred Tax of Rs. 61.18 crores)
 [(Previous Year Rs. 27.72 crores) (net of Deferred Ta x of Rs. 14.28
 crores)], has been transferred from Additional Reserve created as per
 Section 29C of the National Housing Bank Act, 1987 pursuant to circular
 NHB(ND)/DRS/Pol-No.03/2004-05 dated August 26, 2004 to Provision for
 Contingencies Account.
 
 (iv) Provision for Contingencies debited to the Profit and Loss Account
 includes Provision for Diminution in the Value of Investments amounting
 to Rs. 23.80 crores (Previous Year Rs. 9.87 crores). The balance of the
 Provision represents provision made against non-performing assets and
 other contingencies.
 
 16 (i) Special Reserve has been created over the years in terms of
 Section 36(1)(viii) of the Income-tax Act, 1961 out of the
 distributable profits of the Corporation. Special Reserve No. I relates
 to the amounts transferred upto Financial Year 1996-97, whereas Special
 Reserve No. II relates to the amounts transferred thereafter.
 
 (ii) As per Section 29 C of the National Housing Bank Act, 1987, the
 Corporation is required to transfer at least 20% of its net profits
 every year to a reserve before any dividend is declared. For this
 purpose any Special Reserve created by the Corporation under Section
 36(1)(viii) of the Income- tax Act, 1961 is considered to be an
 eligible transfer. The Corporation has transferred an amount of Rs. 400
 crores (Previous Year Rs. 355 crores) to Special Reserve No. II in
 terms of Section 36(1)(viii) of the Income-tax Act, 1961 and an amount
 of Rs. 342 crores (Previous year Rs. 245 crores) to Additional Reserve
 (u/s 29C of the NHB Act).
 
 (iii) During the year an amount of Rs. 26,750 (Previous Year Rs. Nil)
 has been written back on account of 5,000 (Previous Year Nil) stock
 options lapsed under Employee Stock Option Scheme 2002. The same has
 been included in the Accounts under Salaries and Bonus.
 
 17 During the year, the Corporation utilised Rs. 43,12,82,956 (Previous
 Year Rs. 20,90,30,654) out of the Securities Premium Account in
 accordance with Section 78 of the Companies Act, 1956 towards the
 premium payable on the redemption of FCCBs of the Corporation. The
 Corporation has written back Rs. 3,66,78,561 (Previous Year Rs.
 119,17,29,833) on conversion of FCCBs to the Securities Premium Account
 being the provision for premium on redemption of FCCBs created in the
 earlier years by debit to the Securities Premium Account.
 
 18 (i) Contingent Liability in respect of guarantees provided by the
 Corporation aggregated to Rs. 156.56 crores
 
 (Previous Year Rs. 152.01 crores).
 
 (ii) Contingent liability in respect of income-tax demands, net of
 amounts provided for and disputed by the Corporation, amounts to Rs.
 315.11 crores (Previous Year Rs. 243.67 crores). The matters in dispute
 are under appeal. The said amount has been paid/adjusted and will be
 received as refund if the matters are decided in favour of the
 Corporation.
 
 (iii) Contingent Liability in respect of corporate undertakings
 provided by the Corporation for securitisation of receivables
 aggregated to Rs. 594.85 crores (Previous Year Rs. 220.12 crores). The
 outflows would arise in the event of a shortfall, if any, in the cash
 flows of the pool of the securitised receivables.
 
 19 The Corporations main business is to provide loans for the purchase
 or construction of residential houses in India.  All other activities
 of the Corporation revolve around the main business. As such, there are
 no separate reportable segments, as per the Accounting Standard on
 Segment Reporting (AS 17), notified by the Companies (Accounting
 Standards) Rules, 2006.
 
 20 As per the Accounting Standard on Related Party Disclosures (AS
 18), notified by the Companies (Accounting Standards) Rules, 2006, the
 related parties of the Corporation are as follows :
 
 A)   Subsidiary Companies
 
 HDFC Developers Ltd.
 
 HDFC Holdings Ltd.
 
 HDFC Trustee Company Ltd.
 
 HDFC Standard Life Insurance Company Ltd.
 
 GRUH Finance Ltd.
 
 HDFC Venture Capital Ltd.
 
 HDFC Ventures Trustee Company Ltd.
 
 HDFC Asset Management Company (Singapore) Pte. Ltd.
 (w.e.f. April 10, 2008) (Subsidiary of HDFC Asset
 Management Company Ltd.)
 
 HDFC Investments Ltd.
 
 HDFC Asset Management Company Ltd.
 
 HDFC Realty Ltd.
 
 HDFC ERGO General Insurance Company Ltd.
 
 HDFC Sales Pvt. Ltd.
 
 HDFC Property Ventures Ltd.
 
 Griha Investments (w.e.f. November 26, 2008)
 (Subsidiary of HDFC Holdings Ltd.)
 
 21 In accordance with the Accounting Standard on Leases (AS 19),
 notified by the Companies (Accounting Standards) Rules, 2006, the
 following disclosures in respect of Operating and Finance Leases are
 made :
 
 (i) Income from Leases net of lease terminal adjustment of Rs.
 2,17,27,220 (Previous Year Rs. Nil), includes Rs. 16,89,49,109
 (Previous Year Rs. 15,34,71,318) in respect of properties and certain
 assets leased out by the Corporation under Operating Leases. Out of the
 above, in respect of the non-cancellable leases, the future minimum
 lease payments are as follows :
 
 Period                              Current Year        Previous Year
                                           Rupees               Rupees
 
 Not later than one year             12,20,66,114         11,07,00,240
 
 Later than one year but not 
 later than five years                24,60,31,566        33,97,58,740
 
 (ii) The Corporation has acquired properties under non-cancellable
 operating leases for periods ranging from 36 months to 108 months. The
 total minimum lease payments for the current year, in respect thereof,
 included under Rent, amount to Rs. 3,30,01,530 (Previous Year Rs.
 2,81,00,761). Out of the above, the Corporation has sub- leased a
 property, the total sub-lease payments received in respect thereof
 included under Other Income amount to Rs. 1,54,26,000 (Previous Year
 Rs. 1,20,91,994). The future minimum lease payments in respect of the
 properties acquired under non-cancellable operating leases are as
 follows:
 
 Period                            Current Year          Previous Year
                                         Rupees                 Rupees
 
 Not later than one year            2,85,50,135            3,00,43,712
 
 Later than one year but not 
 later than five years              3,56,44,500            4,55,39,908
 
 22 In accordance with the Accounting Standard on Earnings Per Share
 (AS 20), notified by the Companies (Accounting Standards) Rules, 2006 :
 
 (i) In calculating the Basic Earnings Per Share the Profit After Tax of
 Rs. 2282,54,27,543 (Previous Year Rs. 2436,24,62,407) has been adjusted
 for amounts utilised out of Shelter Assistance Reserve of Rs.
 5,21,59,522 (Previous Year Rs. 5,42,68,159).
 
 Accordingly the Basic Earnings Per Share has been calculated based on
 the adjusted Profit After Tax of Rs. 2277,32,68,021 (Previous Year Rs.
 2430,81,94,248) and the weighted average number of shares during the
 year of 28,42,96,490 (Previous Year 27,05,19,406).
 
 (ii) The reconciliation between the Basic and the Diluted Earnings Per
 Share is as follows :
 
                                    Current Year        Previous Year
 Particulars                              Rupees               Rupees
 
 Basic Earnings Per Share                  80.10                89.86
 
 Effect of outstanding Stock 
 Options and FCCBs                         (1.38)               (4.58)
 
 Diluted Earnings Per Share                78.72                85.28
 
 (iii) The Basic Earnings Per Share has been computed by dividing the
 adjusted Profit After Tax by the weighted average number of equity
 shares for the respective periods; whereas the Diluted Earnings Per
 Share has been computed by dividing the adjusted Profit After Ta x by
 the weighted average number of equity shares, after giving dilutive
 effect of the outstanding Stock Options and FCCBs for the respective
 periods. The relevant details as described above are as follows :
 
 Particulars                              Current Year     Previous Year
 
 Weighted average number of shares for 
 computation of Basic Earnings Per Share  28,42,96,490      27,05,19,406
 
 Diluted effect of outstanding Stock 
 Options and FCCBs                           50,22,315       1,45,36,562
 
 Weighted average number of shares for 
 computation of Diluted Earnings Per 
 Share                                    28,93,18,805      28,50,55,968
 
 23 During the current year the shareholders of the Corporation approved
 an issue of 56,90,000 stock options under Employees Stock Option
 Scheme–2008 (ESOS–08). The Compensation Committee of the Corporation at
 its meeting held on November 25, 2008 granted the said options along
 with 1,00,000 options lapsed under ESOS-07, in all aggregating to
 57,90,000 stock options at an exercise price of Rs. 1350.60 per option
 representing 57,90,000 equity shares of Rs. 10 each to the employees
 and directors of the Corporation. The said price was determined in
 accordance with the pricing formula approved by the shareholders i.e.
 at the latest available closing price of the equity share of the
 Corporation on the stock exchange having higher trading volume.
 
 In terms of ESOS - 08, the options would vest over a period of 1-3
 years from the date of grant, but not later than November 24, 2011,
 depending upon the option grantee completing continuous service of
 three years with the Corporation. Accordingly, no options have vested
 in the current year. The options can be exercised over a period of five
 years from the date of respective vesting.
 
 Under Employees Stock Option Scheme–2007 (ESOS–07), the Corporation had
 on September 12, 2007, granted 54,56,835 stock options at an exercise
 price of Rs. 2,149 per option representing 54,56,835 equity shares of
 Rs. 10/- each to the employees and directors of the Corporation. The
 said price was determined in accordance with the pricing formula
 approved by the shareholders i.e. at the latest available closing price
 on the stock exchange having higher trading volume.
 
 In terms of ESOS - 07, the options would vest over a period of 1-3
 years from the date of grant, but not later than September 11, 2010,
 depending upon grantee completing continuous service of three years
 with the Corporation.  Accordingly, during the year 51,99,240 (Previous
 Year Nil) were vested [including 34,244 options (Previous Year Nil
 options) vested and lapsed]. The options can be exercised over a period
 of five years from the date of respective vesting.
 
 Under Employees Stock Option Scheme–2005 (ESOS–05), the Corporation had
 on October 25, 2005, granted 74,73,621 stock options at an exercise
 price of Rs. 912.90 per option representing 74,73,621 equity shares of
 Rs. 10/- each to the employees and directors of the Corporation. The
 said price was determined in accordance with the pricing formula
 approved by the shareholders i.e. at the latest available closing price
 on the stock exchange having higher trading volume.
 
 In terms of ESOS–05, the options would vest over a period of 2-3 years
 from the date of grant, but not later than October 24, 2008, depending
 upon grantee completing continuous service of three years with the
 Corporation.  Accordingly, during the year 1,68,691 (Previous Year
 35,79,414) were vested [including 6,631 options (Previous Year 4,743
 options) vested and lapsed]. The options can be exercised over a period
 of five years from the date of respective vesting.
 
 Method used for accounting for share based payment plan:
 
 The Corporation has used intrinsic value method to account for the
 compensation cost of stock options to employees of the Corporation.
 Intrinsic value is the amount by which the quoted market price of the
 underlying share exceeds the exercise price of the option. Since the
 options under ESOS-08, ESOS-07 and ESOS-05 were granted at the market
 price, the intrinsic value of the option is Nil. Consequently the
 accounting value of the option (compensation cost) is also Nil.
 
 24 (i) Additional Tax on Proposed Dividend, Rs. 140,68,88,809 (Previous
 Year Rs. 120,68,06,388) has been calculated @16.995% on the Proposed
 Dividend after netting off an amount of Rs.  4,33,99,451 (Previous Year
 Rs. Nil), being the dividend tax paid by the Subsidiary companies of
 the Corporation on the dividends paid to the Corporation as per Section
 115(O)(1A) of the Income Tax Act, 1961.
 
 (ii) Additional Tax on dividend 2007-08 credit taken, Rs. 14,05,33,209
 (Previous Year Rs. Nil), pertains to the dividend tax paid by the
 subsidiary companies of the Corporation on the dividend paid to the
 Corporation as per Section 115(O)(1A) of the Income Tax Act, 1961.
 
 (iii) In respect of equity shares issued pursuant to Employee Stock
 Option Scheme and conversion of FCCBs, the Corporation paid dividend of
 Rs. 43,04,625 for the year 2007-08 and tax on dividend of Rs. 7,31,571
 as approved by the shareholders at the Annual General Meeting held on
 July 16, 2008.
 
 25 Figures for the previous year have been regrouped wherever
 necessary.